Nike Shares Tumble 18 Percent After Company Lowers Revenue Projections

Nike's headquarters in Beaverton, Ore., in a file photo. (Natalie Behring/Getty Images)

Footwear and apparel corporation Nike declared lower projected revenues for fourth quarter 2024, while cutting down revenue expectations for the upcoming year, triggering a crash in stock prices.

Nike’s revenues declined by 2 percent for the fourth quarter ended March 31 compared to a year back, the company said in a June 27 earnings release. Full-year 2024 revenues remained flat.

During an earnings call on the same day, Nike CFO Matthew Friend said that first quarter 2025 revenue is expected to be down by approximately 10 percent. “This reflects more aggressive actions in managing our classic footwear franchises, continuing challenges on NIKE Digital, muted wholesale order books with newness not yet at scale, a softer outlook in greater China, and a number of quarter-specific timing factors,” he said.

For the full fiscal year 2025, Mr. Friend said revenues will be “down mid-single digits, with the first half down high single digits.” Headwinds from foreign exchange are expected to take away one percentage point from 2025 revenues.

“We have been navigating several headwinds, which we now expect to have a more pronounced impact on fiscal 2025,” Mr. Friend said. And even though the next few quarters “will be challenging, we are confident that we are repositioning NIKE to be more competitive with a more balanced portfolio to drive sustainable, profitable long-term growth.”

Nike shares crashed following the earnings release and 2025 guidance. Shares were trading at $76.88 as of 10:05 a.m. ET on Friday, down more than 18 percent from Thursday’s close of $94.25. Year to date, the stock was trading down by around 27 percent.

Nike’s lifestyle business, which includes the company’s sportswear offerings, declined in the fourth quarter, offsetting strong growth in the sports performance business. The lifestyle business had seen double-digit growth over the past several years, Mr. Friend said.

NIKE Digital, the company’s ventures including the website and apps, declined 10 percent in the fourth quarter due to “softer traffic, higher promotions, and lower sales of certain classic footwear franchises.”

In the Chinese market, the company saw traffic at brick-and-mortar stores fall by as much as double digits. In the Europe, Middle East, and Africa (EMEA) markets, the firm continued to see “uneven trends.”

Nike CEO John Donahoe said that the company is taking near-term challenges “head-on while making continued progress in the areas that matter most to NIKE’s future—serving the athlete through performance innovation, moving at the pace of the consumer, and growing the complete marketplace.”

Cost Cutting, Supply Chain Investigation

During Nike’s second-quarter 2024 earnings call in December 2023, Mr. Friend said that the company was trying to deliver up to $2 billion in cost savings over a three-year period.

The cost savings were to be achieved by measures such as improved supply chains, more automation, reducing management layers, and boosting the firm’s procurement capabilities.

“We will reallocate and invest the majority of these savings to deliver the greatest consumer impact on our largest growth opportunities,” he said at the time.

During the recent earnings call, Mr. Friend reiterated the company’s commitment toward building an operating model that focuses on better cost productivity.

Meanwhile, Nike’s supply chain has been under scrutiny. In July last year, for example, the Canadian Ombudsperson for Responsible Enterprise (CORE) launched an investigation into Nike Canada Corp. due to allegations that the firm had supply relationships with Chinese companies using or benefiting from the forced labor of the oppressed Uyghur community in China.

The complaint against Nike was filed by a coalition of 28 Canadian organizations. Nike claims they have no ties to any of the alleged Chinese firms.

One of the companies Nike is alleged to have ties with is Huafu Fashion Co. Ltd., which the complaint claims owns a subsidiary in the Xinjiang region and engages in state-sponsored forced labor.

“I have decided to launch investigations into these complaints in order to get the facts and recommend the appropriate actions,” said Sheri Meyerhoffer, the Canadian Ombudsperson.

Nike had earlier issued an official statement clarifying its position on the forced labor issue. “Nike is committed to ethical and responsible manufacturing and we uphold international labor standards … Nike does not source products from the XUAR (Xinjiang), and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region.”

The United States banned the import of Chinese products linked to forced labor of the Uyghur people in December 2021 by enacting the Uyghur Forced Labor Prevention Act.

During an earnings release in 2021, Mr. Donahoe had praised China, saying that the country would drive long-term growth for the firm.

“We’re a brand of China and for China,” he said at the time. According to data from Statista, Nike’s revenues from China totaled $7.24 billion in 2023, down from $8.29 billion in 2021. This was nearly 15 percent of the firm’s total global revenues of $48.76 billion.