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Important points
- Nike reported third-quarter fiscal 2024 sales and profits that exceeded analyst expectations.
- But the company said on an earnings call that sales will likely decline by a low single-digit percentage in the first half of fiscal 2025 as Nike transforms its product portfolio and combats a weak economic outlook.
- Nike stock initially soared after better-than-expected third-quarter results, but then reversed course and ended extended trading down nearly 6%.
Nike (NKE) stock fell nearly 6% in after-hours trading Thursday after the sports apparel company gave a weaker revenue outlook, offsetting a better-than-expected quarterly earnings report.
Shares initially soared after Nike announced fiscal 2024 fiscal third-quarter revenue of $12.43 billion and earnings of 77 cents per share, both of which beat analyst consensus estimates.
During the company’s earnings call, Chief Financial Officer Matthew Friend reiterated the company’s forecast for full-year sales growth of about 1% in fiscal 2024. However, he said the company expects sales to decline by low single digits in the first half of fiscal 2025.
“This reflects near-term headwinds from the lifecycle management of our major product franchises, more than offsetting the scale of new products as we shift our product portfolio toward newness and innovation.” Mr. Friend said. “This also continues to reflect the subdued macro outlook around the world.”
In December, when Nike last released its quarterly results, it lowered its growth forecast for 2024, citing weakness in overseas markets, particularly in Greater China and Europe, the Middle East and Africa (EMEA). At the time, the company announced plans to cut costs by about $2 billion over the next three years.
In the fiscal third quarter, Nike’s Greater China sales increased 5% to $2.08 billion, while EMEA sales decreased 3% to $3.14 billion. North American sales increased 3% to $5.07 billion.
The upcoming Summer Olympics are very important for Nike, and they are planning several product launches and marketing campaigns to coincide with the event.
“We have been driving several innovations for more than a year, and our objective is to delight consumers and disrupt the industry,” CEO John Donahoe said in an earnings call. Ta. “Our brand storytelling will become sharper and bolder, leveraging athletes and sports moments, starting with the Olympics this summer.”
Friend said the company believes “the Paris Olympics will be a catalyst for our brand as we launch our latest Nike Air innovations for athletes.”
Friend said Nike is reducing supplies of classic shoes like the Air Force 1 and Pegasus to focus on new product releases. “Given the consumer response to our latest products, we have decided to accelerate our actions, even in a more intense promotional environment.”
Nike stock fell 5.7% to $95.11 in after-hours trading Thursday, its lowest since October of last year.
Update: This article has been updated since publication to include executive comments on the earnings call, updated stock information, and additional background.
Correction: This article has been updated to correct references to which quarter the results were in and to clarify Nike’s guidance for the first half of fiscal 2025.
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