21 March 2025
If you are covering Nike’s latest financial results, please find below a comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
“Nike’s results came in better than expectations, or better put, less bad than expected. Revenues were down 7%, benefitting from a strong holiday season and Cyber Monday falling in the quarter, which were then followed by decline in January and February.
“As expected, the wholesale market outperformed digital, though both were negative, as Nike is clearing out its inventory predominantly in its own online channel. Inventories did decline slightly by 2%, but still remain elevated across all geographies.
“Sales declined in all regions, with North America and Europe down moderately, but the big concern is that China saw revenue declines of 15%, driven by a tough macro environment, and competition, as well as aggressive clearance.
“Given the problems facing the company, Nike is only guiding quarter on quarter. For Q4 the group is expecting clearance actions to be more aggressive, with revenues expected to be down, but that this decline should moderate going forward.
“Interestingly, Nike has a premium valuation despite all its issues, as a meaningful number of investors anticipate its earnings to rebound rapidly, plus the emergence of "green shoots" in Nike's business could send its share price much higher. However, if that rebound takes longer than expected then further material share price falls are not out of the realms of possibility.
“Nike is such a well-known brand, a brand many have grown up with as kids and across generations. Investors really want it to do well and are looking for reasons to get in, but unfortunately, yesterday was not the day.”
