Nike stock sinks 5.6% on earnings beat; CEO exit raises red flags

Core Insights - Nike reported a Q1 2025 earnings per share (EPS) of $0.70, exceeding consensus estimates of $0.52 by 34.9% [1] - Revenue for the quarter was $11.59 billion, slightly below expectations of $11.65 billion, with a significant 9% year-on-year decline in constant currency revenues [1] - Over the past five years, Nike has only achieved a 4.7% growth in sales, with a troubling 10.4% year-on-year revenue decline for this quarter [2] Stock Performance - Nike's stock opened at $88.05, peaked at $89.58, but closed down 2% at $87.81 by the end of regular market hours [2] - In after-hours trading, the stock further declined to $84.52, marking a total drop of 5.64% [2] - Year-to-date, Nike shares have decreased by 20.68% [2] Leadership Changes - CEO John Donahoe announced his retirement effective October 13, with Elliott Hill set to take over, raising concerns about stability among investors [3] - The announcement of the CEO's retirement comes amidst disappointing financial results, contributing to investor unease [3] Guidance and Future Outlook - Nike withdrew its revenue guidance, which previously forecasted a mid single-digit revenue decrease, and postponed its investor day originally scheduled for November 19 [4] - Analysts had set an average price target of $110.19 for Nike, but revised targets are expected following the disappointing earnings report [4] - The future of Nike's $2 billion cost savings plan under new leadership remains uncertain, with expectations of further stock price declines in the short to medium term [4]