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Shares in Nike fell sharply on Thursday after the world’s largest sportswear maker by revenues reported weaker than expected sales for its latest quarter and lowered its outlook for the year ahead.
Matthew Friend, Nike’s chief financial officer, said the fourth-quarter results had “highlighted challenges” that had led it to update its full-year outlook. The company was taking “aggressive” action to reorganise inventory at Nike-owned stores and in its digital channel, he said, after seeing slowing demand for lifestyle products.
Revenues for Nike’s direct-to-consumer segment fell 8 per cent in the three months ended in May to $5.1bn, while overall revenues sank 2 per cent to $12.6bn.
The news of declining demand in Nike’s stores and online sent its shares down more than 12 per cent in after-hours trading to $82.50, having closed at $94 for the day.
Nike has spent much of the year executing a strategy shift and a $2bn cost-savings plan articulated in December, when it also suffered a steep stock drop after warning of softening consumer demand. The shift is something of an about-face on a previous reorganisation, begun before the Covid-19 pandemic, to focus on direct-to-consumer and digital sales.
John Donahoe, Nike’s chief executive, told analysts on a conference call that “the headcount dimension of the save-to-invest [plan] is behind us. And now those teams are focused on driving for the consumer innovation and execution.”
At the same time, Nike has faced increased competition from smaller rivals, including brands such as Hoka and On, which have taken market share, especially in the wholesale running category as Nike focused on direct-to- consumer sales.
Friend, Nike’s CFO, said it was now aiming to win back market share and expand “the overall marketplace” rather than focusing on “one particular channel or the other”.
In its latest quarter, Nike also reported declines in the greater China region, where its brick-and-mortar traffic fell by “double digits” compared with the previous year, and “uneven” trends in Europe, the Middle East and Africa.
The company said it expected revenue to drop by 10 per cent in the current quarter, and for revenue in the 2025 fiscal year — which started in June — to decline by a mid-single-digit percentage.
Nike’s revenues were slightly below expectations last quarter as sales of its Converse brand dropped 18 per cent, but the company’s earnings of 99 cents a share exceeded analysts’ forecasts by almost 20 per cent. Year on year, sales fell 1.7 per cent, while net income was up 45 per cent.
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