The American sportswear consumer company Nike (NKE) is expected to release its first-quarter Fiscal 2025 earnings on October 1. Wall Street analysts project a decline in both earnings and revenues for Q1, anticipating a slight revenue drop of 0.09% year-over-year to $11.65 billion and a 0.44% decrease in earnings per share to $0.52.
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Also, Nike has struggled with its share price this year, ranking among the worst performers in the Dow Jones Industrial Average (DJIA) with a year-to-date loss of nearly 17%. Increased competition from emerging brands has impacted the financial performance of this sneaker giant. However, Nike’s long-term outlook remains strong, as it continues to hold a dominant position in the sportswear market.
What to Watch When Nike Releases Its Q1 Earnings
When Nike reports its earnings, it will be important to keep an eye on the following factors, in addition to the standard earnings metrics:
- Guidance: During the previous earnings call, Nike spooked markets by reducing its full-year guidance. It will be crucial to monitor comments regarding the guidance for the current quarter to determine if the company still anticipates a sales decline in the second quarter of this fiscal year.
- Digital Segment Performance: Nike has been grappling with ongoing challenges in its Digital segment, highlighted by a decline in global web traffic. According to TipRanks’ Website Traffic tool, total estimated visits to nike.com declined by 1.30% year-over-year in Q1. In their previous earnings call, Nike attributed the reduction in its full-year guidance, among other factors, to sluggish online sales.
- Comments on Nike’s Global Markets: Also, Nike has been facing issues across its international markets, including sluggish consumer spending in China, growing competition in the Europe, Middle East, and Africa (EMEA) region, and struggles in North America. During the Q4 earnings call, Nike’s Finance Chief, Matthew Friend, stated that the company is navigating “increased macro uncertainty” in the Greater China region and facing “uneven consumer trends” across its global markets.
- Direct-to-Consumer Strategy: Nike has shifted to a new business model focused on selling directly to consumers, cutting ties with third-party retailers. Investors will be keen to hear more updates during the upcoming earnings call to better understand Nike’s future direction.
- Leadership Transition: Last week, Nike announced the retirement of CEO John Donahoe, who had frequently been criticized for underwhelming sales performance. Elliott Hill, a 30-year veteran of the company who retired in 2020, will take over as CEO. Investors are now closely monitoring Nike’s upcoming first-quarter earnings to gain insights into the new management’s strategy.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can gauge options traders’ expectations for the stock post-earnings report. Based on an $83 strike price, with call options priced at $5.02 and put options at $0.02, the expected price movement, based on the at-the-money straddle is 6.67%.
Is Nike a Good Stock to Buy Right Now?
Turning to Wall Street, Nike has a Moderate Buy consensus rating based on 15 Buys and 18 Holds assigned in the last three months. At $93.58, the average NKE price target implies 6.34% upside potential.
