Why Is Nike (NKE) Down 8% Since Last Earnings Report?

Core Viewpoint - Nike's recent earnings report showed mixed results, with a decline in revenues and earnings per share year over year, leading to a withdrawal of fiscal 2025 guidance and a subsequent drop in share price [2][6][7]. Financial Performance - Nike reported Q1 fiscal 2025 EPS of 70 cents, a 26% decline from the previous year, but above the Zacks Consensus Estimate of 52 cents [2]. - Revenues fell 10% year over year to $11.59 billion, missing the Zacks Consensus Estimate of $11.65 billion [3]. - On a currency-neutral basis, revenues decreased by 9% year over year [3]. Sales and Revenue Breakdown - Sales at NIKE Direct decreased by 13% to $4.7 billion, with a 20% drop in NIKE Brand Digital [5]. - Wholesale revenues declined 8% year over year to $6.4 billion [5]. - Revenue declines were observed across all geographic segments, with North America down 11% to $4.8 billion and EMEA down 13% to $3.1 billion [9][10]. Cost and Margin Analysis - Gross profit declined 8% year over year to $5.3 billion, while gross margin expanded by 120 basis points to 45.4% due to lower product costs and effective pricing actions [13]. - Selling and administrative expenses fell 2% to $4 billion, but as a percentage of sales, they increased by 210 basis points to 34.9% [14]. Balance Sheet and Shareholder Returns - Nike ended the quarter with cash and cash equivalents of $8.5 billion, a 37% increase year over year [16]. - The company returned $1.8 billion to shareholders, including $1.2 billion in share repurchases [17]. Forward Outlook - Nike withdrew its fiscal 2025 guidance but expects Q2 revenues to decline by 8-10% and gross margin to decrease by 150 basis points [18]. - The company anticipates slight revenue improvements in the second half of fiscal 2025 due to new product introductions [21]. - Estimates for the stock have trended downward, with a consensus estimate shift of -21.73% [22].