Nike (NKE) stock fell as much as 19% on Friday after the retailer said it expects revenue to fall more than previously thought next year.
The company said Thursday that it expects revenue to decline to single digits in 2025, including an expected 10% decline in the first quarter. Nike had initially targeted overall sales growth in 2025.
Nike stock was headed for its worst one-day drop since 2001.
The guidance reflects a continuing trend from Nike’s fiscal 2024 fourth quarter, which the shoemaker announced after the closing bell on Thursday. The company said quarterly revenue in the fourth quarter fell 2% from a year earlier to $12.61 billion, below Wall Street estimates of $12.86 billion. Meanwhile, Nike’s earnings of $0.99 per share beat analysts’ expectations of $0.66. Nike’s direct-to-consumer sales fell 8% from the same quarter last year to $5.1 billion.
Finance [2025] “It will be a transitional year for our business,” Nike CEO John Donahue said during the company’s earnings call.
The company is trying to reignite sales growth in what has been a lackluster year for the stock so far. David Swartz, an equity analyst at Morningstar, told Yahoo Finance that the sales number was “very weak” and was the main concern with the release.
Morgan Stanley analyst Alex Stratton lowered Nike’s rating from “overweight” to “equal weight” after the earnings announcement, noting that Nike shares were “put on penalty” in the near term. Stratton lowered its price target to $79 from $114.
“While we are undergoing a strategic change, recent performance has been riddled with quarterly problems.
“Mistakes and guidance downgrades,” Stratton wrote in a note to clients. “NKE’s long-term growth and profitability trajectory is unclear and lower than we previously assumed.”
The company’s stock had already entered trading down more than 17% over the past year, far behind the S&P 500 (^GSPC)’s 26% gain, as investors grew wary of slowing growth at the retailer.
“We suspect many investors will view this as a ‘buy the dip’ event, and we believe NKE shares are destined to remain in the penalty box until new product innovations actually start to materialize and management regains investor confidence,” Wedbush VP of Equity Research Tom Nikic wrote in a note after the earnings call.
Wall Street is keeping a close eye on Nike’s product pipeline as the Oregon-based company works to fend off competition in the core athletic footwear market from rivals like Adidas (ADDYY) and relative upstarts like On (ONON) and Deckers (DECK)’s Hoka brand.
Nike executives confirmed that they believe their plans to expand the range of new products are on the right track and will impact the company’s financial statements by the end of the year.
“We’re planning for substantial, sequential improvements in the second half compared to the first half, and that starts with the confidence we have around the new products we’re bringing to market,” Matthew Friend, Nike’s chief financial officer, said on the earnings call.
Josh Schaeffer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for an in-depth analysis of the latest stock market news and events that move stock prices..
Read the latest financial and business news from Yahoo Finance.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”