Can Nike just do it again with the new CEO? Not this year

The consequences of its flawed direct-to-consumer (D2C) strategy continue to haunt Nike. As reported Tuesday (Oct. 1), the company's omnichannel revenue showed weakness as it tried to ingratiate itself with its wholesale partners and recapture some of the magic that gave it double-digit growth a decade ago.

“We are moving aggressively to transform our product portfolio, create better balance in our business and reinvigorate brand momentum through sports,” said Nike CFO Matt friend told the audience of the company's earnings call. “Still, a comeback of this magnitude takes time and while there are some early wins, we still need to turn things around.”

That turned out to be an understatement. Nike reported revenue for the first quarter of fiscal 2025 of $11.6 billion, down 10% year over year, driven by declines across all segments. Nike Direct sales fell 13% to $4.7 billion, with Nike Brand Digital sales falling 20%, although a 1% increase in Nike-owned stores partially offset the decline. Gross margin improved 120 basis points to 45.4% due to lower product and logistics costs.

Despite these challenges, Friend painted an optimistic picture of Nike's futurea future that includes the wholesale partners it once relegated to the background, including planned exclusives with Foot Locker, Dick's Sporting Goods And unnamed ongoing specialty retail chains.

One key reason for optimism was missing from the call: New CEO Elliott Hill replaced John Donahoe last week. Hill is a seasoned Nike loyalist and is expected returning the brand to its sports-focused roots rather than the digitally focused lifestyle brand it became under Donahoe. According to Friend, the company will do so seek Balance in its distribution, but will not give up Nike Direct and Nike Digital strategy.

“We continue to see opportunities to operate our direct business more profitably,” Friend said in response to an analyst’s question about strategy.

“We have talked about the investments we are making against the expectation of further growth and have largely met consumer demand for these channels. We continue to see opportunities and that includes a higher mix of full-price products in our direct channels, but also leveraging supply chain capacity relative to the capacity we've actually built to serve our D2C business. As we have discussed in recent quarters, our focus is on driving growth across the market.”

Nike has postponed any guidance for the remainder of its fiscal year Year, And The company expected similar sales declines in the coming quarter as it has to return to promotional pricing for many of its best-known brands, including Air Force and Air Jordan. Friend expects a greater focus on running and football. both who have better international distribution than their basketball and lifestyle brands.

“Part of the pressure on margins and the additional color that we've added to the rest of the year is that through the greater increase in dimensionality, particularly in the Nike direct channels and particularly in the digital channels, we believe this to be temporary Margin headwinds are emerging. “Size,” said Friend, “but going forward, these (iconic) products will continue to be an important part of the portfolio.” We're simply focused on driving novelty and innovation to build momentum with consumers and create more energy for consumers.”

And how will Nike's new wholesale partners react?

“Our partners are committed to re-igniting Nike’s wholesale growth and momentum,” said Friend. “And I would not ignore the fact that the most important thing in wholesale is that we must have broad, segmented distribution to create and demonstrate the full dimension of the Nike portfolio across men's, women's and children's brands .”