Why Nike Shares Are Falling Today

Nike, Inc. NKE shares are trading lower following fourth-quarter earnings and soft guidance for fiscal year 2025.

During a quarterly earnings conference call, Nike’s CFO, Matthew Friend, announced a revised outlook for fiscal 2025, anticipating a mid-single-digit decline in reported revenue, a significant shift from earlier expectations of growth.

Check This Out: Nike Q4 Earnings Highlights: Revenue Miss, EPS Beat, ‘Taking Our Near-Term Challenges Head-On’

Nike anticipates a high single-digit decline in sales for the first half of the year, a notable revision from their earlier forecast of a low single-digit decrease.

For the first quarter, Nike projects revenue to be down approximately 10%. This reflects more aggressive actions in managing classic footwear franchises, continuing challenges on Nike Digital, muted wholesale order books, a softer outlook in Greater China, and a number of quarter-specific timing factors.

The company cautioned that foreign exchange headwinds will now have a one-point translational impact on revenue in the year.

“We are advancing our timelines to tighten total supply of certain classic footwear franchises at different paces across different channels around the world,” said the CFO. “In particular, we are aggressively adjusting our forward-looking plans for these franchises on Nike Digital, where they have their highest share of business. All told, we expect these actions to create several points of short-term headwinds on revenue in fiscal 2025.”

The firm expects gross margin expansion in fiscal year 2025 of 10 to 30 basis points on a reported basis.

This reflects benefits from strategic pricing actions and lower product input costs, partially offset by supply chain deleverage, channel mix shifts, and net foreign exchange impact. 

Nike’s fourth-quarter revenue was $12.6 billion, a 2% decline year-over-year, failing to meet the Street’s consensus estimate of $12.91 billion, according to data from Benzinga Pro.

Following the earnings report, Stifel analyst Jim Duffy downgraded Nike from Buy to Hold and lowered the price target from $117 to $88. Morgan Stanley analyst Alex Straton also downgraded Nike from Overweight to Equal-Weight, reducing the price target from $114 to $79.

Price Action: NKE shares are trading lower by 14.8% to $80.20 premarket at last check Friday.

Read Next: Nike Shares Crash 15% In Pre-Market Amid Missed Q4 Expectations And Potential ‘Headwinds’ Next Year

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