Nike reports earnings after the bell. Here's what Wall Street expects

Nike will report quarterly earnings Tuesday as investors brace for another set of less-than-stellar results. The company announced in September that CEO John Donahoe would be stepping down.

Here's what analysts are expecting from the world's largest sneaker company for its fiscal first quarter of 2025, according to consensus estimates from LSEG:

• Earnings per share: 52 cents
• Revenue: $11.65 billion

Analysts are expecting sales to drop 10% from the year-ago period and profits to plunge by nearly 45%. 

The grim outlook comes amid a reset at Nike. Over the last year, it's been accused of falling behind on innovation and ceding share to competitors as it focused on selling directly to consumers through its own websites and stores rather than through wholesalers such as Foot Locker and DSW. 

In September, Nike announced that Donahoe would be stepping down and would be replaced by company veteran Elliott Hill, who is scheduled to take the helm Oct. 14.

Under Donahoe's leadership, the company grew annual sales by more than 31%, but it got there by churning out legacy franchises such as Air Force 1s, Dunks and Air Jordan 1s — not the groundbreaking styles that turned the company into a global powerhouse. 

Over the last few quarters, Donahoe has spoken about the need to improve innovation and mend Nike's relationships with wholesalers, but the company's board decided that Hill, who spent 32 years with Nike before retiring in 2020, would be the right person to lead its next chapter. 

Donahoe is expected to be present during the company's conference call with investors Tuesday afternoon, but observers will be keen to see if there are any clues into where the company is planning to go under Hill's leadership. 

The incoming CEO will need to power up Nike's innovation pipeline, reset its relationships with wholesalers and improve morale after a series of layoffs and a breakdown in culture. 

Overall, the sneaker market has been relatively stagnant in the U.S. Consumer spending on discretionary goods such as new clothes and shoes has been sluggish, which has made Nike's situation that much more difficult. 

Footwear sales in the U.S. are projected to grow by just 2% in 2024 compared with 2023 after barely budging between 2022 and 2023, according to Euromonitor. Athletic footwear is expected to grow by about 5.6%, the firm said. 

Nike's performance has also been weighed down by the uneven economy in China, Nike's third-largest market by revenue, which will be another key item to watch for in the earnings report. Nike's performance in China is often an indicator of the region's financial health, and in late June, it warned of a "softer outlook" in the region. However, China's central bank recently unveiled its largest stimulus measures since the Covid pandemic, which is expected to give the region's economy a much-needed boost. 

Nike's fiscal first quarter would have concluded prior to those stimulus measures, but executives may share color on how sales are performing during the current period. 

Shares of Nike closed at $88.40 on Monday, down about 19% so far in 2024, significantly underperforming the S&P 500's gains of about 21%.