Nike Faces Historic Stock Plunge After Missing Sales Forecasts

Nike, a major player in the athletic wear industry and a valued company in the Dow Jones, experienced a significant stock plummet after failing to meet sales expectations in its Q4 results, according to reports by FactSet. The company’s earnings for the quarter saw a noteworthy 50% increase in comparison to the previous period, but revenue dipped by 2%, missing analyst forecasts.

During the fourth quarter, Nike brand sales slightly decreased, while revenue from Converse experienced a substantial 18% drop. Notably, Nike brand footwear sales declined by 4%, although apparel sales showed a promising increase of 3%. Equipment sales, on the other hand, saw a significant 34% rise.

The revenue from Nike Direct fell by 8%, primarily due to a decline in digital sales of the Nike brand and a reduction in Nike-owned store sales. Wholesale revenue, however, experienced a positive uptick of 5%. The company’s gross margin also improved by 110 basis points to 44.7%.

In light of the disappointing Q4 results, several analysts downgraded Nike, including UBS, JPMorgan, Stifel, Morgan Stanley, Citi, Baird, and TD Cowen. UBS notably downgraded Nike to neutral from buy, citing concerns about the company’s fundamental trends.

Nike’s stock plunged by 19.4% early on Friday, hitting the lowest levels since April 2020. This significant drop marked one of the worst performances in the Dow this year, with the company facing challenges in its sales growth and outlook for the future.

Amidst the downturn, Nike’s co-founder, Phil Knight, experienced a substantial decrease in net worth, losing $5.5 billion in a single day’s trading. Evercore ISI analysts remained cautiously optimistic, maintaining a buy rating for the company despite the current challenges.