Nike’s shares plummeted by 11% after the company cut its full-year guidance, anticipating a 10% drop in sales for the current quarter, significantly below the 3.2% analysts had expected. The sneaker giant now forecasts fiscal 2025 sales to decline by mid-single digits, a stark contrast to previous growth predictions. The company’s CFO, Matthew Friend, highlighted the challenges ahead, including slower online sales, planned declines in classic footwear lines, and increased macroeconomic uncertainty in China.
Despite these hurdles, Nike remains optimistic about repositioning itself for sustainable, long-term growth. For the fiscal fourth quarter, Nike exceeded earnings expectations but fell short on revenue, reporting $1.01 per share against an expected 83 cents and $12.61 billion in revenue compared to the anticipated $12.84 billion. The company’s net income rose to $1.5 billion, or 99 cents per share, up from $1.03 billion, or 66 cents per share, a year earlier. However, sales dropped to $12.61 billion, a 2% decrease from the previous year.
Nike attributed its sales shortfall to various factors, including a decline in its lifestyle business and insufficient momentum in its performance sector to offset this loss. Online sales suffered due to a higher proportion of lifestyle products and fewer sales of popular franchises like the Air Force 1. Additionally, traffic in China declined across all channels starting in April due to regional macroeconomic conditions, although sales in China exceeded Wall Street expectations at $1.86 billion.
North America, Nike’s largest market, reported $5.28 billion in sales, below the expected $5.45 billion. In Europe, the Middle East, and Africa, Nike’s revenue was $3.29 billion, missing the $3.32 billion estimate, while the Asia Pacific and Latin America regions saw $1.71 billion in sales, below the $1.77 billion forecast.
The company’s Converse brand continued to underperform, with revenue dropping 18% to $480 million due to declines in North America and Western Europe. Nike has faced criticism for lagging in innovation and is now reducing its reliance on classic franchises to focus on new styles and innovations, particularly with the upcoming 2024 Paris Olympics. CEO John Donahoe expressed confidence in the company’s ability to overcome current challenges and achieve long-term success.
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