Following yesterday’s release of Nike’s figures for the three months 31 August 2024; Louise Deglise-Favre, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Nike’s sales in Q1 FY2024/25 drastically dropped 10.4% on the previous year, reaching $11.6bn, a significant slowdown from the previous quarter which only saw a contraction of 1.7%. While this can be partially blamed on global macroeconomic issues and a wider slowdown within the sportswear market, Nike has lost out to competitors due to its lasting lack of innovation and lagging fashion credentials. Its decline is also worrying considering the period included the Paris Olympics where Nike was heavily exposed thanks to the many athletes it sponsors. Nike has withdrawn its previous FY2024/25 guidance, citing its change in CEO as the reason, with Elliott Hill returning to the business in October to lead its future after John Donahoe’s retirement. However, its guidance will likely be revised downwards, given it was originally expecting H1 to decline by high single-digits and Q1 has fallen below that, with the full year forecast to be down mid-single digits%.
“Sales in North America fell 11% in Q1 in constant currency, as the brand continued to struggle with relevancy in an increasingly saturated market. EMEA was its worst performing region, with sales falling 12%, with its declining appeal compounded by shoppers remaining cautious with their spending. Asia Pacific & Latin America continued to be Nike’s most resilient region, with sales only dropping 2%, thanks to its many emerging markets. Surprisingly, despite mounting economic issues, Greater China only saw sales decline 3%, thanks to the brand’s strong focus on the country with exclusive localized marketing and products.
“In terms of channels, Nike’s direct-to-consumer (DTC) business was down 13%, dragged down by a 20% plummet in digital sales, which the 1% growth in its owned stores was unable to offset. Its wholesale business performed comparatively better to its DTC division, declining 8%, as the business continues to refocus on strengthening its partnerships.
“Nike’s footwear sales dropped 11.4%, continuing to be plagued by a lack of innovation making its performance styles unable to stand out against competitors such as On and HOKA. Its lifestyle ranges continue to suffer from the rise in popularity of Adidas’ Originals models and New Balance’s Y2K-inspired ranges. Nike’s clothing proposition struggled just as much, with sales dropping 10.5%, partly due to a continued step back post-pandemic, but also due to shoppers increasingly turning to lifestyle brands with versatile designs, especially women, favouring brands such as Alo Yoga, Adanola and Vuori. Unsurprisingly, Converse’s struggles persisted with sales declining 14.8% as its outdated designs continue to elude from consumers’ minds.”
