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Nike shares plunge after company projects bigger-than-expected sales drop in 2025
Nike (NKE) shares fell as much as 11% Thursday in after-hours trading after the retailer said it expects revenue to fall more than previously forecast next year.
The company said it expects revenue to decline by mid-single digits in 2025, including an expected 10% decline in the first quarter. Nike initially guided for overall sales growth in 2025.
The guidance reflects a continued trend from Nike’s fiscal 2024 fourth quarter, which the shoemaker reported after the close on Thursday. The company said quarterly revenue in the fourth quarter fell 2% from a year earlier to $12.61 billion, below Wall Street estimates of $12.86 billion. Meanwhile, Nike’s earnings per share of $0.99 beat analyst expectations of $0.66. Nike’s direct-to-consumer sales fell 8% from the same quarter a year ago to $5.1 billion.
“Supervisor [2025] It will be a transitional year for our business,” Nike CEO John Donahoe said during the company’s earnings call.
The company has been trying to reignite sales growth in what has been a lackluster year for the stock so far. Morningstar equity analyst David Swartz told Yahoo Finance that the sales number was “very weak” and was the main concern since launch.
Nike’s gross margins rose to 44.7% in the fourth quarter, up from 43.6% in the same period last year, but below analysts’ expectations of 45.3%.
The company’s shares entered the launch down more than 17% over the past year, far behind the S&P 500 (^GSPC) 26% gain as investors grew wary of the retailer’s slowing growth.
“Overall, this longtime industry leader continues to struggle surprisingly, and we believe investor patience with management is waning by the day,” Wedbush senior vice president of equity research Tom Nikic wrote in a note after the earnings release. “In the long term, NKE has been one of the most successful growth stories in our coverage and we continue to hope that the brand will regain its mojo. But it looks like we will have to wait longer.”
Wall Street has been closely watching Nike’s product pipeline as the Oregon-based company works to fend off competition from rivals such as Adidas in its core athletic footwear market.TO ADD) and relative starters like On (ONO) and Deckers’ (COVERED AREA) Hoka brand.
Nike executives stressed that they believe their plans to scale new products are on “the right track” and will have an impact on the company’s finances by the end of the year.
“We’re planning for significant, sequential improvement in the second half compared to the first, and that starts with the confidence we have in the new products we’re bringing to market,” Nike CFO Matthew Friend said on the earnings call.
The story continues
Will Innovation Boost Nike Stock? Toronto Blue Jays 1B Vladimir Gurrero Jr.’s red and white Nike sneakers. (Matthew J. Lee/The Boston Globe via Getty Images) (Boston Globe via Getty Images)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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