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Nike is struggling to sell clothing and apparel and those “near-term challenges” prompted the retail giant to post one of its slowest annual sales periods in years.
Shares of Nike were down more than 10% after the company reported quarterly earnings that signaled it is dealing with economic and consumer headwinds.
Nike’s chief financial officer Matthew Friend said in a statement that the retailer’s fourth-quarter results “highlighted challenges” that prompted it to reassess its fiscal 2025 outlook.
“We are taking actions to reposition Nike to be more competitive, and to drive sustainable, profitable long-term growth,” Friend said.
Friend told investors during the earnings call that for the fiscal 2025 year the company expects lower digital growth, a decline in classic footwear trends, increased macro-uncertainty, and uneven consumer trends. He added that Nike plans to keep selling to wholesale partners, such as Macy’s and Foot Locker. Moreover, the retailer forecasts revenue will be down in the mid-single digits for the year. For the current quarter, Nike expects sales to decline by 10% due to a slowdown in its Chinese market and waning consumer demand around the world.
Beaverton, Oregon-based Nike fell short of meeting Wall Street’s estimates. During the fourth quarter, it generated $12.61 billion in revenue. The Street forecasted it would report $12.84 billion, according to FactSet.
Its underperformance was also impacted by its subsidiary shoe business, Converse, which reported an 18% sales decline, largely led by a pullback in consumer spending in North American and Western Europe. In May, Nike said that it would be slashing jobs at Converse, but did not explicitly say how many positions it would remove. In February, it said it would cut thousands of posts to reinvest in other areas, such as health.
Nike’s less-than-stellar performance comes amid an economic environment muddled by stubborn inflation and price-conscious consumers. And even for the biggest sportswear company in the world, selling shoes has been an ongoing challenge. That hasn’t kept Nike from at least trying to get a leg up. Just this week, it boasted that $1,000 Jordan high-tops could help it make a comeback in China.
In April, Nike said that for the 2024 Paris Olympics it would be outfitting Olympians for teams such as the U.S., Canada, and Kenya, as well as others.
“Our winning playbook will take time,” said John Donahoe, Nike’s CEO, during the company’s earnings call Thursday.