Key Takeaways
- Nike reported revenue and profit for the third quarter of fiscal 2024 that topped analysts’ expectations.
- The company, however, said in its earnings call that revenue in the first half of fiscal 2025 is likely to decline low single digits as Nike shifts its product portfolio and contends with a subdued economic outlook.
- Nike shares initially jumped after the better-than-anticipated Q3 results but reversed course and finished the extended trading session down nearly 6%.
Nike (NKE) stock fell nearly 6% in after-hours trading Thursday as the athletic apparel company provided a sluggish outlook for revenue that offset a better-than-expected quarterly earnings report.
Shares initially surged after Nike said that revenue in the third quarter of fiscal 2024 inched up to $12.43 billion while earnings per share came in at 77 cents, both surpassing the consensus view of analysts.
During the company’s earnings call, Chief Financial Officer Matthew Friend reiterated the expectation that full-year fiscal 2024 revenue will be up about 1%. However, he said the company projects a low single digit decline in revenue in the first half of fiscal 2025.
“(T)his reflects near-term headwinds from lifecycle management of our key product franchises, more than offsetting the scaling of new products, as we shift our product portfolio toward newness and innovation,” Friend said. “This also continues to reflect the subdued macro outlook around the world.”
In December when it last reported quarterly results, Nike scaled back its growth projections for fiscal 2024 citing weakness in overseas markets, notably in its Greater China and Europe, Middle East and Africa (EMEA) businesses. The company announced plans at the time to cut about $2 billion in costs over the next three years.
In the fiscal third quarter, Nike’s Greater China revenue increased 5% to $2.08 billion, while EMEA revenue fell 3% to $3.14 billion. North American revenue rose 3% to $5.07 billion.
The upcoming Summer Olympic Games are critical for Nike, which is planning several product launches and marketing campaigns around the event.
“We’ve pulled forward several innovations more than a year, and our intent is to delight consumers and disrupt the industry,” Chief Executive Officer John Donahoe said during the earnings call. “Our brand storytelling will leverage our athletes and sport moments to become sharper and bolder, beginning with the Olympics this summer.”
Friend said the company believes that “the Paris Olympics will serve as a catalyst for our brands as we launch our newest Nike Air innovations for athletes.”
With the focus on the launch of new products, Nike is reducing the supply of classic footwear such as the Air Force 1 and Pegasus, Friend said. “Given the way consumers are responding to our newest product journeys, even amid a more promotional environment, we have decided to accelerate our actions.”
Nike shares fell 5.7% to $95.11 in after-hours trading Thursday, hitting their lowest levels since last October.
UPDATE: This article has been updated after publication to include comments from executives during the earnings call, the latest share price information and additional context.
CORRECTIONS: This article has also been updated to correct a reference to which quarter results were from and to clarify Nike’s guidance for the first half of fiscal 2025.