Nike (NKE) stock fell as much as 19% on Friday after the retailer said it expects revenue to fall more than previously thought next year.
The company said Thursday it expects revenue to decline to the mid-single digits in 2025, including a projected 10% decline in the first quarter. Nike had initially forecast overall sales growth in 2025.
Nike stock was headed for its worst single-day decline since 2001.
The guidance reflects a continuing trend from Nike’s fiscal 2024 fourth quarter, which the shoemaker announced after the closing bell on Thursday. The company said quarterly revenue in the fourth quarter fell 2% from a year earlier to $12.61 billion, below Wall Street estimates of $12.86 billion. Meanwhile, Nike’s earnings of $0.99 per share beat analysts’ expectations of $0.66. Nike’s direct-to-consumer sales fell 8% from the same quarter last year to $5.1 billion.
Finance [2025] “2020 will be a transition year for our business,” Nike CEO John Donahoe said during the company’s earnings call.
The company is trying to revitalize sales growth in what has been a lackluster year for the stock so far. Morningstar equity analyst David Schwartz told Yahoo Finance that the sales number was “very weak” and was the main concern with the release.
Morgan Stanley analyst Alex Stratton lowered Nike’s rating from “overweight” to “equal weight” after the earnings announcement, noting that Nike shares were “put on penalty” in the near term. Stratton lowered its price target to $79 from $114.
“While we are undergoing a strategic change, recent performance has been riddled with quarterly problems.
“NKE’s long-term growth and profitability trajectory is unclear and lower than our previous assumption,” Stratton wrote in a note to clients.
The company’s stock had already traded down more than 17% over the past year, far behind the S&P 500’s (^GSPC) gain of 26%, as investors became wary of slowing growth at the retailer.
“We doubt many investors will view this as a ‘buy-out’ event, and believe NKE shares are destined to remain in the token penalty box until new product innovations actually start to emerge and management regains investor confidence,” Tom Nikic, senior vice president of equity research at Wedbush, wrote in a note following the earnings call.
Wall Street has been closely watching Nike’s product line as the Oregon-based company works to fend off competition in the core athletic footwear market from rivals like Adidas (ADDYY) and relative upstarts like On (ONON) and Hoka brand Deckers (DECK).
Nike executives confirmed that they believe their plans to expand the range of new products are on the right track and will impact the company’s financial statements by the end of the year.
“We’re planning for substantial, sequential improvements in the second half compared to the first half, and that starts with the confidence we have around the new products we’re bringing to market,” Matthew Friend, Nike’s chief financial officer, said on the earnings call.
Josh Shaffer is a reporter with Yahoo Finance. You can follow him on X @_joshschafer.
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