Nike (NYSE:NKE) shares dropped more than 3% in after-hours trading on Thursday after the company posted its fiscal 2025 first-quarter earnings. While the sportswear titan managed to surpass earnings expectations, its revenue fell just short of analysts’ forecasts, dampening investor sentiment.
The company reported earnings per share (EPS) of $0.70, beating the estimate of $0.52. However, revenue for the quarter came in at $11.6 billion, slightly underperforming the consensus estimate of $11.65 billion.
NKE – Weekly Chart
The price of NKE shares have rallied in recent weeks with the potential for a bottom at the $82 level. Further gains could target the downtrend resistance line at $110-15.
The sportswear giant kicks off first-quarter results for its fiscal 2025 after the market closes on Tuesday. The Dow Jones company named a new CEO in mid-September as it seeks to recover from a recent slump in the company’s fortune.
Rising competition and slowing sales growth have had a negative effect on Nike stock. Nike appointed Elliott Hill, a 32-year veteran of the company, to return to serve as CEO. The board and current CEO John Donahoe agreed that he will step down on October 13.
Donahoe will continue as an advisor into January 31 and will support Hill, who started his Nike career as an intern sales associate. Prior to Hill’s retirement in 2020, he was President of Consumer and Marketplace, where he led all commercial and marketing operations for the Nike and Jordan brands.
In his new role, Hill will be focused on reviving sales while battling rising competition from new running brands On Holding and Hoka.
But some analysts are negative on the stock with JPMorgan putting Nike on “Negative Catalyst Watch” and said they expect an earnings miss due to headwinds across its geographic markets. The firm noted consumer strain and digital promotions in China, alongside challenges for direct-to-consumer factory stores in North America.
Despite the gloom, Nike shares are priced at 22 times earnings, which is lower than the 5-year average of 32 times, marking a 50% discount on its usual strength.
