Shares of Nike experienced a significant decline of around 11% during extended trading on Thursday. This drop came after the company revealed its reduced full-year guidance and anticipated sales decline. The retailer projected a 10% decline in sales for the current quarter, citing weak sales in China and fluctuating consumer trends globally.
Nike’s latest projections for fiscal 2025 sales reveal a significant decline, which stands in stark contrast to the optimistic predictions made by analysts. In the past, the company had anticipated an increase in sales. In addition, the company anticipates a decrease in first-half sales by a significant percentage, which is a revision from its previous projection of a smaller decrease.
First-quarter sales have experienced a much more significant decline than analysts had predicted, with a decrease of 10% compared to the anticipated 3.2% drop, as reported by LSEG.
Addressing these challenges, Nike’s finance chief, Matthew Friend, emphasized the need for patience in achieving a significant recovery. Despite the upcoming challenges in the coming quarters, we have full confidence in our ability to reposition Nike in order to enhance our competitiveness. Our goal is to achieve a more balanced portfolio that will drive sustainable, profitable, long-term growth. The speaker highlighted the challenges the company is facing, including a decline in online sales, planned reductions in classic footwear lines, economic uncertainty in the Greater China region, and inconsistent consumer trends across Nike’s markets. My friend also mentioned that sales to wholesalers are projected to decrease as the company shifts its attention towards new innovations and reduces its emphasis on classic franchises.
Despite exceeding earnings estimates for the fiscal fourth quarter thanks to cost-cutting measures, Nike fell short of revenue expectations. The company’s efforts to control expenses have yielded positive outcomes, however, the shortfall in revenue underscores the persistent obstacles it confronts.