Nike makes a major announcement that shakes up investors

Although Nike is ranked as the number one sports apparel company in the US, it is no secret that it has struggled to put its sales numbers on a positive track.

The famous sportswear brand has seen big revenue losses in the past few quarters due to a failed business strategy.

In addition, increased competition in the sportswear market due to rising rival brands such as Hoka and OnRunning ONON has lit a fire under Nike to promote novelty by focusing on developing more innovative products to win back lost clientele.

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In its previous earnings report, Nike acknowledged its struggles and lowered its outlook for the quarter just ended, confirming another quarter full of declines.

Although expectations have been lowered, Nike still holds out hope for its future. Still, its latest earnings report, in which Nike made a major announcement that analysts and investors didn’t see coming, may have crushed any outside optimism left in the company.

Nike makes a major announcement during its 2025 Q1 earnings call.

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Nike reports first-quarter earnings for 2025 after hiring new CEO

According to Nike (NKE) In its fiscal 2025 Q1 earnings report, revenue fell 10% year-over-year, with Nike’s direct revenue down 13% and wholesale revenue down 8%.

Although Nike reported earnings per share of $0.70, down 26% year-over-year, the company still beat analysts’ expectations of $0.52.

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According to Nike’s previous forecast for 2025, revenue was as forecast, but sales and traffic fell short of forecast numbers.

Nike reported a 13 percent drop in direct-to-consumer sales and an 8 percent drop in wholesale revenue compared to last year.

Although Nike has said it will invest in developing more innovative products, the company will be more cautious with its spending, and its employees appear to be taking the heat.

In its earnings, Nike reported a 2% drop in general and administrative costs and a 15% increase in brand marketing spend to invest in key sporting events.

However, Nike reduced its general operating expenses by 7%, which was achieved by reducing salary-related costs.

Nike makes a shocking announcement that throws everyone for a loop

In addition to declining sales, Nike has also undergone several major changes, including the hiring of its new CEO, Elliott Hill, last month.

Although Nike is optimistic about its latest executive transition, the company doesn’t expect Hill’s new leadership to affect its performance through fiscal 2026.

As a result, Nike announced Tuesday that it would withdraw its full-year outlook and postpone its investor day to allow Hill’s transition to take full shape.

“We all look forward to working with Elliott as he leads NIKE’s next chapter. In light of our CEO transition and with three quarters remaining in the fiscal year, we are withdrawing our guidance for the full year. We intend to provide quarterly guidance for the balance of the fiscal year,” Nike executive VP and CFO Matthew Friend said on Nike’s Q1 earnings call.

“This gives Elliott the flexibility to reconnect our employees and teams, assess current business strategies and trends, and develop our plans to best position the business for FY26 and beyond. To this end, we have also decided to postpone. Investor Day,” added Friend.

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According to Nike’s guidance for Q2, revenue is expected to decline by an average of 9%.

The sportswear company also expects general and administrative expenses to be flat compared to the previous year, but will continue to prioritize investments in creating more innovative products while tightening operating expenses.

As of Wednesday afternoon, Nike shares were down about 6.3% and are down about 22.5% year to date.

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