Nike’s Q2 basic earnings per common share were $0.78, a decrease from $1.04 year-on-year, while diluted earnings per common share also dropped to $0.78 from $1.03.
Matthew Friend, Nike executive vice-president, chief financial officer said that the financial performance for Q2 largely aligned with expectations as the company continues to advance in reshaping its business.
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Friend also noted traffic and retail sales across the marketplace were lower than anticipated, particularly in September and October. However, in November, the company experienced a positive shift in both digital and in-store traffic, especially during the key consumer events of the quarter.
“Nike’s second-quarter financial performance largely met our expectations, as we continue to make progress in shifting our portfolio.
Under Elliott’s leadership, we are accelerating our pace and reigniting brand momentum through sport,” Friend added.
Key Q2 FY25 operational performance highlights:
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By GlobalDataFor the three months ending 30 November 2024, Nike’s revenues decreased 8% on a reported basis and down 9% on a currency-neutral basis to $12.35bn from $13.38bn in the same period last year, reflecting ongoing headwinds from its franchise management actions.
Nike Brand revenues fell 7% to $12.0bn, with an 8% decrease on a currency-neutral basis, reflecting declines across all regions.
Nike Direct revenues experienced a 13% decline to $5.0bn, attributed primarily to a 21% decrease in Nike Brand Digital sales and a 2% decrease in revenues from Nike-owned stores.
Wholesale revenues also saw a downturn, with a 3% decrease to $6.9bn on a reported basis and a 4% decrease on a currency-neutral basis.
Converse, a subsidiary of Nike, reported revenues of $429m, marking a 17% decrease on a reported basis and an 18% decrease on a currency-neutral basis, with sales falling across all territories.
Gross profit for Nike in Q2 FY25 was $5.38bn, down from $5.97bn in the same quarter the previous year.
As of 30 November 2024, the company had repurchased 112.8m shares under its current programme, amounting to approximately $11.3bn.
Nike president and CEO Elliott Hill said: “After an energising 60 days of being back with my Nike teammates, our clear priority is to return sport to the centre of everything we do.
“We’re taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I’m confident you will see more moments of Nike being Nike again.”
Outlook
Nike anticipates a decline in revenue for the third quarter, with projections indicating a decrease in the low double-digit percentage range.
The forecasted downturn is attributed to the early implementation of the strategies previously mentioned and amplified by the negative impact of foreign exchange fluctuations. However, this is somewhat mitigated by the advantage gained from Cyber Week sales falling within the third quarter timeframe.
For Q3, Nike’s gross margins are projected to fall by about 300 to 350 basis points. This expected reduction includes charges related to restructuring that were incurred during the corresponding period of the previous year.
Recently, Chummy Tees conducted an analysis of the number of listings of the top 100 brands on online marketplaces eBay and Depop. The study found that Nike is the brand most frequently resold on these platforms.
