Nike Shares Decline as JPMorgan Adopts Cautious Outlook Ahead of Earnings

Nike’s stock (NYSE: NKE) is down over 1% in premarket trading on Monday after JPMorgan placed the company on “Negative Catalyst Watch” ahead of its first-quarter earnings report for fiscal year 2025.

This cautious stance is driven by expected declines in revenue, with JPMorgan analysts adjusting their earnings per share (EPS) forecast for Nike’s Q1 to $0.48, lower than the consensus estimate of $0.52.

The bank attributes this downward revision to a projected 10% drop in gross profit dollars, which is worse than the anticipated 9.3% decline.

JPMorgan’s assessment highlights challenges across all major geographic regions as significant contributing factors to Nike’s difficulties. In China, the combination of cautious consumer behavior and digital promotions is adversely affecting demand, while local competitors are gaining market share through aggressive pricing strategies.

In the Europe, Middle East, and Africa (EMEA) region, Nike is facing declining consumer traffic and increased competition in both lifestyle and performance segments.

Meanwhile, in North America, the company is encountering issues with its direct-to-consumer (DTC) factory stores, particularly due to reduced spending from lower-income consumers, according to JPMorgan.

Nike’s overall financial outlook for the full year is also under pressure, with JPMorgan revising its FY25 EPS estimate down to $2.98, below the consensus of $3.08, influenced by revenue projections that are 5.9% lower than previously expected.

The firm anticipates a slower recovery, shifting the predicted financial model inflection to FY27. JPMorgan expects a margin recovery strategy in FY26 to precede revenue improvement in FY27.

Despite JPMorgan being optimistic about the recent appointment of Elliott Hill as CEO, which may signal a potential return to Nike’s foundational strategies, near-term financial obstacles are likely to continue. Analysts emphasize that Nike’s digital sales, wholesale performance, and consumer demand in key markets will be crucial for its recovery trajectory.