Nike Posts Strong Q1 Sales Despite Sluggish Profitability

Nike begins its first full year with Elliott Hill at the helm and does so by surprising the market. The U.S. sports equipment company, which is in the midst of restructuring after two years of weak performance, closed the first quarter of the current fiscal year with a 1% increase in sales, surprising the market after a string of down quarters. However, the group’s profitability is weakening.

In the period ended August 31st, the swoosh company posted sales of $11.72 billion, up 1% from $11.589 billion in the same period. Nike ended 2024 with a 10% drop in sales, down 12% in the fourth quarter.

“While we are achieving success, we still have work ahead of us to keep all sports, geographies and channels on a similar path as we manage a dynamic operating environment,“ said Elliott Hill, Nike’s chairman and CEO. “I am confident that we have the right approach in Win Now and that our new lineup in Sport Offense will be the key to maximizing Nike’s entire portfolio over the long term,“ he added.

Nike closed the first quarter with sales of $11.72 billion, an increase of 1%

Despite the improvement in sales in the first three months of the current fiscal year, the company has warned of a larger than expected impact from changes in U.S. tariff policy. The company is now targeting a cost of $1.5 billion and an impact of 1.2 percentage points on its gross margin in the current fiscal year, compared to the $1 billion and 0.75 points projected last June.

The company posted first-quarter gross profit of $4.943 billion, down 5.97% from $5.257 billion in the first three months of last year. At the end of the first quarter, the gross margin stood at 42.2%, 3.2 points lower than a year ago.

The Oregon group’s net income, meanwhile, plummeted by 30.83% to $727 million, losing the one billion dollar barrier of twelve months ago.

In terms of products, Nike has not been able to recover the ground it has lost in its star sports category, sneakers. Thus, footwear sales, which account for more than half of quarterly sales (with $7.41 billion), fell by 1% in the first quarter. Apparel sales grew by 9% to $3.313 billion, and equipment sales rose by 4% to $630 million.

In the Americas, the group’s main market, Nike posted 4% growth in the first three months of the year. In Europe, the Middle East and Africa (EMEA), the company posted a 6% increase, while in China it fell by 9% and in the rest of Asia it grew by 2%.