Investing.com -- Shares in Nike (NYSE:NKE) shed more than 14% of their value in premarket U.S. trading after the sports apparel company told investors that revenue is expected to fall by 10% in the current quarter.
Sales in the ongoing 2025 fiscal year are also seen decreasing by a percentage in the mid-single digits. Analysts had been anticipating an uptick of 0.91%, Reuters reported, citing LSEG data.
Analysts at Stifel said the announcement implied a fifth downward consensus revision to Nike's financial estimates in six quarters, adding that it "pushes prospects for growth inflection further into 2025" and "ask[s] investors to both underwrite success of not yet proven styles and look across an uncertain consumer discretionary backdrop." They downgraded their rating of the stock to "Hold" and reduced their 12-month share price target to $88 from $117.
In a post earnings call, Chief Financial Officer Matthew Friend said the guidance reflects "more aggressive actions" in managing its classic footwear products, "continuing challenges" in its digital business, and "muted" wholesale order books. The outlook in its key Chinese operations, which accounts for more than 14% of its worldwide sales, is "softer" as well, Friend noted.
"[T]his quarter, we have been navigating several headwinds, which we now expect to have a more pronounced impact on fiscal [20]25," Friend said. "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."
Fourth-quarter net revenue dropped by 17% to $12.61 billion, falling short of Wall Street expectations of $12.84 billion. Sales of Nike's Converse shoe dipped by 18% in particular. However, earnings per share of $0.99 topped projections.
Analysts at Evercore ISI said Nike was taking steps in the "right direction" to boost performance, but flagged that it is "big machine" to turn around quickly.
Yasin Ebrahim contributed to this report.