Nike Shares Plunge 20% in Worst Drop Since 1980 After Disappointing Q4 Earnings and Weak FY25 Outlook

Jun 28, 2024, 12:10 PM

Nike shares plummeted by 20% following the release of its Q4 FY24 earnings report, marking the worst single-day drop since the company went public in 1980. The sportswear giant reported Q4 earnings per share (EPS) of $0.99, exceeding estimates of $0.83, but missed revenue expectations with $12.6 billion against the anticipated $12.81 billion. Nike's gross margins improved slightly to 44.7% from 43.6% year-over-year, but the company flagged significant challenges ahead. The company’s CFO, Matt Friend, indicated that Q4 results highlighted issues leading to a revised outlook for FY25, with expectations of a mid-single-digit revenue decline. The decline in revenue was attributed to faltering demand, especially in the lifestyle segment, and a 10% drop in digital sales. Regional performance showed a 1.4% revenue decline in North America, a 1.7% decline in EMEA, and a 2.9% increase in China. Nike also projected a 10% decrease in Q1 FY25 revenue. The disappointing forecast has raised concerns about Nike's market position, especially with rising competition from newer brands like On and Hoka. Additionally, the company benefited from lower-than-expected SG&A expenses and a favorable tax rate of 13%, compared to the expected 21%.