Portland, Oregon – Nike’s stock took a significant hit in after-hours trading on Thursday, dropping by as much as 11%. The sportswear giant announced that it anticipates a more substantial decline in revenue for the upcoming year than previously projected. This news comes as a surprise to investors who were initially expecting sales growth in 2025.
According to the company, Nike foresees a mid-single-digit decrease in revenue for 2025, with a projected 10% decline in the first quarter alone. This revised outlook follows a pattern from Nike’s fiscal 2024 fourth quarter report, where the company reported a 2% decrease in quarterly revenue to $12.61 billion. While the earnings per share exceeded expectations, reaching $0.99, the direct-to-consumer sales for Nike saw an 8% decline to $5.1 billion compared to the same quarter last year.
During the earnings call, Nike’s CEO, John Donahoe, acknowledged that fiscal 2025 would be a transitional year for the business. The company has been striving to reignite sales growth following what has been a lackluster performance in the stock market recently. Analysts viewed the sales figures as disappointing, causing concern among stakeholders.
Despite an increase in gross margins to 44.7% in the fourth quarter, up from 43.6% the previous year, Nike fell short of analyst expectations. The company’s stock has experienced a downward trend, dropping more than 17% over the past year, unlike the S&P 500, which saw a 26% gain during the same period.
Nike executives emphasized their commitment to introducing innovative new products to the market to combat competition from rivals like Adidas and emerging brands like On and Deckers’ Hoka brand. They remain optimistic that their product pipeline will drive positive financial results by the end of the year.
Looking ahead, Nike is anticipating significant improvement in the second half of the year compared to the first, bolstered by the launch of new products. Despite the current challenges, the company is focused on regaining momentum in the market and winning back investor confidence.