Nike Earnings: Substandard Results Met Expectations as CEO Change Looms; Shares Attractive

Matching our estimate, Nike's sales declined 10% in fiscal 2025’s first quarter. More significantly, CFO Matt Friend (who handled the earnings call solo ahead of CEO Elliott Hill’s arrival on Oct. 14) suggested that sales and margin improvement are developing slowly. Indeed, second-quarter sales are set to fall 8%-10%, below our estimate for a 6% decline. Current challenges include unsettled economic conditions in major markets, as well as Nike’s decision to pull back on the supply of some major footwear franchises to avoid excessive discounting. While this move is hurting sales at present, we think it is necessary to protect its brand value, the source of our wide moat rating.