Beaverton, Oregon – Nike reported a mix of results in its fourth quarter, with earnings coming in above expectations but revenue falling short. The athletic apparel giant reported adjusted earnings of $1.01 per share, exceeding the estimated $0.85. However, revenue of $12.61 billion fell short of the estimated $12.86 billion.
Morningstar senior equity analyst David Swartz noted that the revenue miss led to a drop in Nike’s shares in after-hours trading. Despite slightly better-than-expected revenue numbers in China, Swartz believes that Nike’s sales recovery in the country may be taking longer than anticipated.
Looking ahead, Swartz believes that new product offerings may help reignite sales growth for Nike, although the impact may not be fully realized until late into fiscal 2025.
In terms of Nike’s performance in China, Swartz feels that the company has the potential for much stronger sales growth in the region. However, concerns remain about Nike’s current performance in China, despite ongoing marketing efforts in the country.
Nike’s focus on product innovation is seen as a key factor in driving future sales growth. The company is set to release new products around the Olympics and in the following winter seasons, with potential impacts on sales expected to be seen in late fiscal 2025.
Swartz also highlighted the challenging economic environment, noting that discretionary spending trends and high inflation could impact not only Nike but also its competitors in the sportswear market. Despite macroeconomic challenges, Nike remains focused on driving product innovation and marketing efforts.
Looking ahead, Nike’s earnings call is approaching, where management is expected to address concerns surrounding gross margins and sales outlook in key regions such as North America, Western Europe, and China. Investors will be looking for guidance on when these markets may see stronger sales growth numbers.
Overall, Nike’s performance in the fourth quarter highlights both strengths and challenges for the company as it navigates the evolving economic landscape and seeks to reignite sales growth through product innovation and marketing efforts.