Nike is in a tough spot as it grapples with a struggling direct-to-consumer (D2C) strategy. In a recent earnings call, the company reported a 10% drop in revenue for the first quarter of fiscal 2025, totaling $11.6 billion. This decline is hitting every part of the business hard.
Nike’s CFO, Matt Friend, explained that despite some small victories, the company hasn’t yet turned things around. Direct sales were particularly affected, with a 13% drop to $4.7 billion and a 20% decrease in online sales. However, sales at Nike-owned stores did see a slight 1% increase.
Amid these challenges, there’s a glimmer of hope: the appointment of new CEO Elliott Hill. Hill, a longtime Nike insider, aims to refocus the brand on its athletic roots instead of the lifestyle brand direction taken under the previous CEO, John Donahoe.
Friend expressed cautious optimism, mentioning plans to work more closely with wholesale partners like Foot Locker and Dick’s Sporting Goods, which were previously sidelined. While Nike remains committed to its D2C strategy, they recognize the need for balance across all sales channels.
However, the company is not expecting a quick recovery. They’ve even postponed guidance for the rest of the fiscal year, anticipating similar revenue declines and the need to offer promotional pricing on popular products like Air Force and Air Jordan shoes.
Friend emphasized the importance of innovation and introducing new products to keep consumers engaged. The company plans to put more focus on categories like running and soccer, which have better international sales compared to basketball and lifestyle items.
As for Nike’s wholesale partners, Friend remains optimistic. He believes they are eager to help reignite growth and broaden the distribution of Nike’s extensive product lineup.
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