Nike shares plunge after retailer says quarterly sales will fall 10%, warns on China weakness

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Nike shoes and logo are seen at a store in Nice, France on May 28, 2024. Shares of Nike plunged on Thursday after the retailer cut its full-year guidance and said it expects sales to drop 10% during its current quarter as the sneaker giant warned of soft sales in China and "uneven" consumer trends across the globe. The company now expects fiscal 2025 sales to be down mid-single digits. It previously expected sales to grow. Nike also expects sales in the first half to be down in the high-single digits, compared to previous guidance of declines in the low-single digits. "A comeback at this scale takes time," the retailer's finance chief Matthew Friend said on a call with analysts. "With this in mind, we've considered a number of factors and scenarios in revising our outlook for fiscal 2025." The company cut its guidance as it contends with slower online sales, planned declines in classic footwear franchises, "increased macro uncertainty" in Greater China and "uneven consumer trends" across Nike's markets, Friend said. It also expects sales into wholesalers to be slower as it scales new innovations and pulls back on classic franchises. Shares plunged roughly 11% in extended trading. For the fiscal fourth quarter, the company handily beat earnings estimates as its cost-cutting efforts continue to bear fruit, but Nike fell short on revenue. Here's how Nike did during the period compared with what Wall Street was anticipating, based on a survey of analysts by LSEG: Earnings per share: $1.01 adjusted vs. 83 cents expected $1.01 adjusted vs. 83 cents expected Revenue: $12.61 billion vs. $12.84 billion expected The company's reported net income for the three-month period that ended May 31 was $1.5 billion, or 99 cents per share, compared with $1.03 billion, or 66 cents per share, a year earlier. Sales dropped to $12.61 billion, down about 2% from $12.83 billion a year earlier. In fiscal 2024, Nike posted sales of $51.36 billion, which is flat compared to the prior year. It's the slowest pace of growth the company has seen since 2010, excluding the Covid-19 pandemic. Nike executives attributed the sales miss to a range of factors. They said its lifestyle business declined during the quarter and that momentum in its performance business, such as its basketball and running shoes, wasn't enough to offset it. Nike saw weakness in online sales in April and May because it had a higher share of lifestyle products. It also saw traffic in China decline beginning in April due to macro conditions in the region. Despite the traffic decline in China, sales in the region exceeded Wall Street expectations, according to StreetAccount, coming in at $1.86 billion, compared with estimates of $1.79 billion. It was the only geographical segment to top estimates for the period. Sales in North America, its largest market, came in at $5.28 billion, below StreetAccount expectations of $5.45 billion. In Europe, Middle East and Africa, Nike posted revenue of $3.29 billion, compared to estimates of $3.32 billion. In Asia Pacific and Latin America, Nike saw $1.71 billion in sales, compared to estimates of $1.77 billion.