Shares of Nike (NKE) fell as much as 11% in after-hours trading on Thursday, after the retailer indicated that sales in the coming year will fall more than previously thought.
The company said it expects revenue to decline by mid-single digits through 2025, including an expected 10% decline in the first quarter. Nike initially targeted overall sales growth in 2025.
The guidance reflects a continued trend from Nike’s fiscal fourth-quarter 2024 results, which the shoemaker reported Thursday after the closing bell. The company said fourth-quarter revenue 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 topped analysts’ expectations of $0.66. Nike’s direct-to-consumer sales fell 8% from the year-ago quarter to $5.1 billion.
“Tax [2025] “It will be a transition year for our company,” Nike CEO John Donahoe said during the company’s earnings presentation.
The company has been trying to reignite sales growth in what has been a lackluster year for the stock so far. Morningstar stock analyst David Swartz told Yahoo Finance that the sales figure was “quite weak” and was the biggest concern from the release.
Nike’s gross margins rose to 44.7% in the fourth quarter, compared with 43.6% in the year-ago period, but fell short of analysts’ expectations of 45.3%.
The company’s shares fell more than 17% year-over-year in its IPO, well short of the S&P 500’s (^GSPC) gain of 26%, as investors worried about slowing growth at the retailer.
“Overall, this long-standing benchmark of the industry continues to surprisingly struggle, and we believe investors’ patience with management is growing thinner by the day,” Wedbush senior vice president of equity research Tom Nikic wrote in a note after the earnings publication. “Over the long term, NKE has been one of the most successful growth stories in our reporting, and we continue to wait for the brand to regain its mojo. But it appears we may have to wait even longer.”
Wall Street has been keeping a close eye on Nike’s product pipeline as the Oregon-based company tries to fend off competition in its core athletic footwear market from rivals like Adidas (ADDYY) and relative newcomers like On (ONON) and Deckers’ ( DECK) Hoka brand.
Nike executives stressed that they are confident that their plans to scale up new products are on track and that it will have an impact on the company’s finances by the end of the year.
“We plan for meaningful, sequential improvement in the second half versus the first half, 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.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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