Nike (OF) stock fell as much as 11% after hours Thursday after the retailer said it expects a larger-than-expected drop in revenue in the coming year.
The company said it expects its revenue to decline by around 5% in 2025, with an expected decline of 10% in the first quarter. Nike initially forecast overall sales growth in 2025.
The guidance reflects a continued trend in Nike’s fiscal 2024 fourth quarter, which the shoemaker reported after the close on Thursday. 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 beat analysts’ expectations of $0.66. Nike’s direct-to-consumer sales fell 8% from a year earlier to $5.1 billion.
“Fiscal year 2025 will be a transitional year for our company,” Nike CEO John Donahoe said during the company’s earnings conference call.
The company has been trying to revive sales growth in a year that has so far been lackluster for the stock. Morningstar equity analyst David Swartz told Yahoo Finance that the sales numbers were “pretty weak” and were the publication’s main concern.
Nike’s gross margins increased to 44.7% in the fourth quarter from 43.6% in the same period a year ago, but remained below analysts’ expectations of 45.3%.
The company’s stock entered the release down more than 17% from last year, far from the performance of the S&P 500 (^GSPC) A 26% gain, as investors worry the retailer’s growth is slowing.
“Overall, this long-standing industry barometer continues to struggle, and we believe investors’ patience with management is growing thinner by the day,” wrote Tom Nikic, senior vice president of the equity research at Wedbush, in a note after the results were released. “Over the long term, NKE has been one of the most successful growth stories in our coverage, and we are still waiting for the brand to regain its momentum. But it looks like we’re going to have to wait even longer. »
Wall Street is closely watching Nike’s product pipeline as the Oregon-based company struggles to fend off competition in its core athletic footwear market from rivals like Adidas (ADD) and relative upstarts like On (ONON) and Deckers (BRIDGE) Hoka brand.
Nike executives stressed that they believe their plans to develop new products are on track and will have an impact on the company’s finances by the end of the year.
“We expect significant, sequential improvement in the second half compared to the first half, and that starts with the confidence we have in the new products we bring to market,” said Nike Chief Financial Officer Matthew Friend , during the earnings conference call.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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