Despite the holiday season, Nike’s fiscal third-quarter sales failed to see a significant uptick, leaving investors disappointed about the company’s near-term prospects. Revenue for the quarter ending in February remained stagnant at $12.4 billion, in line with analysts’ expectations but unchanged from the previous year. Looking ahead, Nike reiterated its guidance for fiscal 2024, anticipating only about a 1% year-over-year growth in revenue.
However, the outlook for fiscal 2025 painted a more challenging picture, with Nike’s management warning of a tough first half of the year. Chief Financial Officer Matthew Friend attributed this to life cycle management of key product franchises and a subdued global macroeconomic environment. As a result, the stock plummeted by 6.6% in premarket trading following the earnings call.
Although Nike reported adjusted earnings of 98 cents per share, surpassing analysts’ consensus of 75 cents, investors were concerned about the restructuring charge of 21 cents per share related to job cuts announced in February. Despite signs of improvement in Nike’s wholesale business, digital sales fell by 3%, and direct-to-consumer revenue remained flat.
The company’s struggles stand in contrast to other footwear companies like Crocs and Deckers, which have seen strong performances in recent quarters. Some analysts have raised questions about whether Nike is losing market share to competitors.
Despite the challenges, approximately 60% of analysts tracked by FactSet maintain a bullish outlook on Nike, with an average price target of $118.92, reflecting optimism about its long-term prospects. However, Nike’s shares have yet to recover from the setback experienced in December and have declined by about 7% in 2024.