Nike Q2 Earnings: Revenue Decline, New Strategy in Focus

Nike (NYSE:NKE) is set to release its fiscal second-quarter earnings after the market closes on Thursday, December 19.

This marks the first earnings report under the leadership of new CEO Elliott Hill, a company veteran who took the reins in October. Investors are watching closely as Nike navigates declining sales, cost-cutting measures, and heightened competition.

Analyst Sentiment & Earnings Expectations

Wall Street remains cautiously optimistic about Nike. Out of 19 analysts tracked by Visible Alpha, 10 rate the stock as a "buy," 8 as a "hold," and 1 as a "sell." The average price target of $87 suggests a potential upside of around 12% from its current price near $78. However, Nike’s stock is still down almost 30% year-to-date, far from its $109 high in early 2024.

Nike is projected to post $12.12 billion in revenue, down more than 9% from the same quarter last year. Net income is expected to decline even more steeply, from $1.6 billion a year ago to $968 million this quarter. The market will be watching for any changes in guidance, as Nike previously withdrew its fiscal outlook and postponed its investor day originally scheduled for November.

This quarter is significant as it marks CEO Elliott Hill’s first major test since taking over in October. Hill’s return has been met with cautious optimism from analysts, many of whom believe his long-standing history at Nike positions him well to drive a turnaround. Investors will be looking for any updates to Nike’s growth strategy, especially with its Investor Day event still unscheduled.

Hill is expected to offer new guidance for the fiscal year as part of Thursday's earnings. Investors hope for clarity on his approach to dealing with competition from smaller brands and slowing growth in key markets like China. Nike has also pledged to focus on "new products and ideas," but details remain scarce.

What Investors Should Watch

1. Updated Guidance: Will CEO Hill provide a new outlook for fiscal 2025? Investors will look for signs of a shift in strategy.
2. Profit Margins: Cost-cutting measures have been a key focus, but how well have they worked?
3. Market Share Battle: With competitors gaining ground, Nike's performance in China and other key markets will be crucial.
4. Stock Movement: While some analysts see a 12% upside, the 30% year-to-date loss underscores uncertainty.