Shares of Nike Inc. NKE experienced a 15% drop during Friday’s pre-market trading. This followed the company’s announcement of its fourth quarter revenues on Thursday, which fell short of expectations.
What Happened: 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.
Nike Direct’s revenue saw an 8% year-over-year decrease, settling at $5.1 billion, while wholesale revenues saw a 5% year-over-year increase to $7.1 billion. Converse revenue also fell by 18% year-over-year to $480 million. Despite growth in several regions, including China, the overall performance was negatively impacted by a weak North American market.
On a positive note, the company’s gross margin rose by 110 basis points to 44.7% in the fourth quarter, thanks to cost-saving initiatives. Adjusted fourth-quarter earnings per share were $1.01, surpassing the Street estimate of 85 cents per share.
Nike concluded the fiscal year with $51.4 billion in revenue, a 1% increase from the previous year’s $51.2 billion. The company reported $7.5 billion in inventories, down 11% year-over-year, and $11.6 billion in cash and cash equivalents.
Matthew Friend, Nike’s Executive Vice President and Chief Financial Officer, said during the earnings call, “This quarter we have been navigating several headwinds, which we now expect to have a more pronounced impact on FY25.”
“Although 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.”
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.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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