This drop comes as the company faces a leadership transition, with Elliott Hill set to take over as President and CEO on October 14, 2024. The company’s direct-to-consumer arm, Nike Direct, saw revenues of $4.7 billion, down 13 per cent, largely due to a sharp 20 per cent decrease in digital sales. Wholesale revenues also fell 8 per cent to $6.4 billion, while Converse reported a 15 per cent decline in revenues, reflecting difficulties across all regions, the company said in a press release.

Despite the revenue decline, Nike’s gross margin improved by 120 basis points, reaching 45.4 per cent. This was driven by lower product and logistics costs, along with benefits from strategic pricing actions taken in the previous year. However, net income dropped by 28 per cent to $1.1 billion, while diluted earnings per share decreased by 26 per cent to $0.70.

The company's performance highlights ongoing challenges in its key markets, with declines reported across all geographies. The rise in demand creation expenses by 15 per cent, primarily for brand marketing during key sports events, further strained profitability.

Nike’s inventories decreased by 5 per cent to $8.3 billion, reflecting a shift in product mix and lower input costs. Cash and short-term investments grew to $10.3 billion, up by $1.5 billion from the previous year, supported by operational cash flow. While selling and administrative expenses dropped by 2 per cent, the company continues to invest heavily in its brand, positioning itself for the long term as it prepares for a new era of leadership, the release added.

“Nike's first quarter results largely met our expectations. A comeback at this scale takes time, but we see early wins—from momentum in key sports to accelerating our pace of newness and innovation,” said Matthew Friend, executive vice president and chief financial officer, Nike, Inc. “Our teams are energised as Elliott Hill returns to lead Nike's next stage of growth.”

As the company navigates this leadership change, it has postponed its previously scheduled Investor Day and plans to address its strategic guidance in an upcoming conference call.

Fibre2Fashion News Desk (KD)