Nike Inc. filed its extended quarterly report, which resulted in both negative and positive callouts from Wall Street.
One big negative was the pullback on regional comparable store sales disclosures.
“When companies pull back on disclosures, it is never a good sign,” BNP Paribas analyst Laurent Vasilescu concluded.
The BNP analyst said that Nike has provided comps in some form on a quarterly basis since fiscal year 2011, and now it is providing year-over-year store sales instead. He said this change reduces the transparency on whether brick-and-mortar growth is being driven by like-for-like sales or if it is due to “simply unit expansion.”
And he noted that last year, Nike also pulled another disclosure when it stopped breaking out Accounts Receivable by region.
The analyst added that the lack of regional comps store sales disclosures follows Nike’s plan to collapse four regions into three — Americas, EMEA (Europe, Middle East and Africa), and Greater China and Asia Pacific — when everyone is trying to figure out when China will turn around.
Previously, Greater China was its own region and Asia Pacific and Latin America were one grouping. Now North America and Latin America are combining to form Americas. The change is expected to be completed in Fiscal Year 2028.
“While this change has already been known, we believe it is unfairly being done under the guise of restructuring…and [to] give investors less transparency in disaggregating China sales,” the BNP analyst concluded.
Vasilescu’s issue is that Nike has long since received a premium multiple for its robust disclosures. On Tuesday, the BNP analyst reiterated his “multiyear underperform” rating for shares of Nike stock. Even worse, he thinks Nike’s stock price could potentially drop all the way down to $19 a share. The stock is currently trading in the $34.00 range on the Big Board.
Simeon Siegel of Guggenheim Securities noted that the quarterly regulatory filing had other nuggets of information that potentially could be more positive than the go-forward guidance provided last Thursday during the first-quarter earnings report.
Siegel said Monday that North America footwear units continued to grow in the first quarter, even though the sector still saw higher discounts. Footwear units were up 2 percent, which the Guggenheim analyst noted represented the fifth consecutive quarter of year-over-year growth. The average selling price (ASP) for North America was down 1 percent due to channel mix and higher discounts that were partially offset by product mix and strategic pricing.
Another positive Siegel noted was that North America EBIT (earnings before interest and taxes) dollars grew 3.2 percent, while margins expanded 20 basis points. “We believe representing the first-time margins and dollars inflected to growth since [fourth quarter 2024], excluding tariff refunds,” he noted. Siegel also estimated that about $69 million year-over-year dollar increase in Demand Creation likely reflected World Cup-related investments that took place in the region during the quarter. And while there are some fears about excess product, the quarterly report indicated that North America inventory fell by 1 percent after growing over the last two years.
Overseas, footwear units in EMEA were down 5 percent. Footwear ASPs were down 6 percent in the quarter, due to channel mix and higher discounts. The first quarter represented the first time EMEA’s wholesale sales fell in a year, with direct-to-consumer sales down even more, yet gross margin was still up an “impressive” 150 basis points year-over-year, representing the largest expansion since the first quarter of 2025.
For Asia Pacific and Latin America, footwear units were flat in the quarter, while ASPs were down 1 percent, mostly due to higher discounts and channel mix that were partially offset by product mix and strategic pricing. And for Greater China, shoe units were down 26 percent, representing the ninth consecutive quarter of year-over-year declines. However, Greater China footwear ASPs were flat for the quarter, mostly due to lower discounts that were offset primarily by channel mix.
In general, Wall Street knows that the Nike turnaround will take at least another 12 to 18 months. More is expected to be learned when Nike holds its Investor Day on Nov. 16 and 17.
Nike’s decline has been ongoing for several years, mostly attributed to a pullback on wholesale and a focus on direct-to-consumer in June 2020 under prior management. New CEO Elliott Hill, who rejoined Swoosh in October 2024, has embarked on a turnaround plan that thus far has seen much success with Nike Running. But the turnaround has taken much longer than expected, in part due to troubles in EMEA and Greater China. And Swoosh’s 78 percent stock decline also cost it a seat on the prestigious S&P 100 Index, although the firm remains a part of the broader S&P 500 Index.