Expectations were modest for Nike ahead of its fourth-quarter earnings report, and the company still whiffed on that low bar.
Wall Street analysts expected flat revenue of $12.86 billion for the three months ending in May, according to S&P Global Market Intelligence, but the company reported revenue of $12.6 billion, down 2%. One bright spot: Earnings per share of $0.99 topped the $0.85 forecast.
“Our fourth-quarter results highlighted challenges that have led us to update our fiscal ’25 outlook,” Matthew Friend, Nike CFO, said in a statement. “We are taking actions to reposition Nike to be more competitive and to drive sustainable, profitable long-term growth.”
During the earnings call, Friend said revenue would be down “mid-single digits” for the 2025 fiscal year, including 10% in the first quarter.”
For the year, Nike reported revenue of $51.4 billion, a mere 0.3% increase over the previous fiscal year. The only years worse in the past two decades for the Swoosh was at the start of COVID-19 (2019-20) and on the heels of the financial crisis (2009-10). Revenue rose 10% during the previous year.
The fiscal year-end results are the one time a year the company provides financial results of its wholly owned Jordan brand, whose foundation was the signing of NBA icon Michael Jordan to an endorsement contract in 1984.
Jordan was the strongest performer of Nike’s divisions with a 6% sales gain to $7 billion, compared to Men’s (1%), Women’s (0%) and Kids (1%).
Jordan brand revenue has doubled since 2020 as it expanded into more women’s gear, non-basketball items and international sales. The “performance” basketball shoe market is down over the past decade, but the “retro” or lifestyle business has more than made up for the declines.
Nike has signed a new crop of young NBA stars to promote the Jordan brand in Zion Williamson, Luka Doncic, Jayson Tatum and Paolo Banchero.
Jordan’s soaring revenues boosted the fortunes of the former basketball player, who earns an estimated $250 million from the Swoosh and ranks as the highest-paid athlete of all time with $2.7 billion in career earnings from salaries and endorsements--$3.75 billion adjusted for inflation. Jordan’s net worth jumped last year when he sold his majority interest in the Charlotte Hornets at a $3 billion valuation.
Nike’s stock is down 13% year-to-date to a recent $94; it dipped a further 11% in after-hours trading following the earnings release. The S&P 500 is up 15% so far in 2024.
(This article has been updated in the fourth paragraph with more information from the earnings call, and with more on the stock drop in the final paragraph.)
