Nike dips 15% in pre-market after disappointing FY2024 results and lower guidance 📉

Nike is falling nearly 15.00% in pre-market trading following yesterday's results for Q4 and the fiscal year ending May 31, 2024. CFO Matthew Friend emphasized the macroeconomic challenges facing the company during a conference. Nike also reported results lower than estimates and announced an update to fiscal forecasts for the fiscal year 2025.

Overall Results:

• Revenue: $12.6 billion (down 2% vs. expected 1% gain)
  • NIKE Direct Revenues: $5.1 billion (down 8%)
  • Converse Sales: $480 million (down 18%)
  • Wholesale Sales: $7.1 billion (up 5%)
• Adjusted Profit: $1.01 per share (beat expectations)

Regional Performance:

• North America:
  • Total Sales: $5.28 billion (down 1%)
  • Footwear Sales: down 6%
  • Apparel Sales: up 4%
  • Equipment Sales: up 47%
• China:
  • Total Sales: up 3%
  • Footwear Sales: up 2%
  • Apparel Sales: up 5%
  • Equipment Sales: up 28%

Despite the weak price action, Nike's performance is not as bad when comparing to peers in the sector. However, the chart above does not take into account today's opening 15% lower. 

Forecasts for FY25

The management informed that Nike faces significant challenges in the fiscal year 2025 due to unfavorable macroeconomic conditions and ongoing market weakness in China. The company currently predicts that sales in the fiscal year 2025 will drop by a few percent in H1. Despite these challenges, gross margin in FY25 is expected to increase by 10-30 basis points. The management expects a 10% revenue decline in Q1, adjusting the gross margin to meet full-year expectations.

New Products

CFO Matthew Friend and CEO John Donahoe acknowledged issues with new products, especially in the face of growing competition in the fitness and running categories. Nike intends to double the number of new product launches by the end of the fiscal year 2025, despite a weak first quarter. Efforts to revamp the running segment include a comprehensive campaign focused on the new Pegasus 41 running shoes, aimed at boosting sales in the lifestyle category.

Nike (D1)

On one hand, Nike announced worse results for the upcoming fiscal year, while on the other hand, it cautiously presented optimistic prospects aimed at increasing product competitiveness. In pre-market trading, Nike's stock price is down nearly 15% to $80.50. This is the lowest level since the COVID-19 crash in March 2020.

Source: xStation 5