Nike (NYSE:NKE) shares are reversing a knee-jerk reaction higher and losing ground after remarks from the company’s CFO acknowledging macro challenges hinted to a guidance cut, and FQ4 revenue was worse than Wall Street expected.
Shares are down 5%, dragging down Foot Locker (FL) by 3% in sympathy.
The sportswear giant earned an adjusted profit of $1.01 per share beating street expectations, but revenue was down 2% versus estimates for a 1% gain.
“While we are encouraged by our progress, our fourth quarter results highlighted challenges that have led us to update our Fiscal ’25 outlook,” said CFO Matthew Friend, adding that, “We are taking actions to reposition NIKE to be more competitive, and to drive sustainable, profitable long-term growth.”
His remarks are fueling a move lower in the stock price as investors brace for a cut in guidance during the earnings call.
By category, NIKE Brand sales were down 1% to $12.1B, while NIKE Direct revenues dropped 8% due to declines in digital sales and NIKE-owned stores. Converse sales dropped 18% and wholesale sales fell 5%. Gross margin expanded 110 basis points to 44.7%, primarily on “strategic pricing actions,” lower shipping costs, and lower warehousing.
In North America, footwear sales were down 6%, apparel was up 4% and equipment sales rose 47% resulting in total North American sales down 1% to $5.28B. Chinese footwear sales rose 2%, apparel was up 5% and equipment sales rose 28% for a total sales increase in China of 7%.
Globally, footwear sales were down 4%, apparel was up 3% and equipment was up 34%, resulting in a 1% decline in total sales across all categories.
Nike typically gives earning and revenue guidance during its earnings call with analysts. Companies that have a high trading correlation with Nike (NKE) include Adidas (ADDYY, ADDDF), Deckers Outdoor (DECK), On Holdings (ONON), Under Armour (UAA, UA), Foot Locker (FL), Skechers (SKX), and Lululemon (LULU).