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Nike Stock Plunges After Missing Sales Forecasts and Cutting Outlook



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Nike stock took a nosedive following its Q4 results announcement where it fell short of sales forecasts and adjusted its outlook. The renowned apparel giant, a component of the Dow Jones, reported a noteworthy 50% surge in Q4 earnings to 99 cents per share. Despite this, revenue saw a dip of 2% amounting to $12.6 billion, missing FactSet expectations.

Within the breakdown, Nike brand sales slightly declined by 1% to $12.1 billion, while Converse revenue plummeted by 18% to $480 million. Nike’s footwear sales faced a 4% decrease, while apparel sales exhibited a 3% rise. The brand’s equipment sales, however, showed a remarkable 34% growth in Q4.

Notably, Nike Direct revenue suffered an 8% decline, hitting $5.1 billion, driven by a 10% drop in Nike brand digital sales and a 2% fall in Nike-owned stores revenue. Conversely, wholesale revenue experienced a 5% increase, totaling $7.1 billion.

Subsequently, the company’s gross margin saw a notable uptick, climbing 110 basis points to 44.7%. This growth was primarily attributed to strategic pricing actions, reduced freight rates, and warehousing costs, albeit offset partially by unfavorable exchange rate changes. Despite the positive margin growth, Nike’s full-year earnings climbed 15% to $3.73 per share, slightly surpassing estimates.

The outlook for 2025, however, took a hit as executives foretell a mid-single-digit revenue decline for the year, with an initial half-year downturn in the high single digits. Nike’s Q1 revenue is estimated to drop by 10%, reflecting challenges in China, Nike Digital, and wholesale operations.

Wall Street responded swiftly to Nike’s results, with UBS downgrading the stock to neutral and reducing its price target. Other firms like JPMorgan, Stifel, and Morgan Stanley also adjusted their ratings on Nike. Moreover, Citi, Baird, and TD Cowen were among those slashing their price targets, with TD Cowen highlighting emerging rivals in the footwear and apparel sector.

The repercussions were immediate, with Nike’s stock plunging by 19.4% in early trading on Friday, marking its lowest level since April 2020. This significant drop solidifies Nike’s position as one of the underperformers in the Dow this year, down 13.3% through Thursday’s close.

Rachel Adams

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