Nike’s Shocking 10% Plunge: Sales Outlook Slashed

Share post:

Nike, a leading athletic apparel⁢ company, ⁣recently announced plans to reduce costs by $2 ‍billion over the next three years due ‌to ‍a decrease in its sales outlook. This news caused the company’s stock‌ to fall by ‍10% ⁤after ⁤hours. Nike’s shares have ⁢been underperforming compared to the broader market, with only a 4.7% increase this year, while the⁣ S&P⁣ 500 has seen greater ​gains.

The company now ⁤expects its full-year ⁣reported ‌revenue to grow by​ approximately 1%,‌ compared to its previous outlook of mid-single digit growth. In the current quarter, which includes the second half of the holiday shopping season, Nike anticipates a slight decline in reported revenue due to challenging ⁤year-over-year ‌comparisons. However, it ‍expects sales to increase by low single digits in the ⁢fourth quarter.

Nike’s finance chief, Matthew Friend, explained that the company’s revised outlook​ reflects increased macroeconomic headwinds, particularly in the Greater ⁢China and⁣ EMEA regions. He also mentioned the ⁣impact of a stronger U.S. dollar on international sales and the challenges of managing wholesale orders in the second half of ​the year.

Despite the​ revised outlook, Nike still expects⁢ its⁤ gross margins to ⁣improve by 1.4 to 1.6 percentage points. Excluding restructuring charges, the company maintains its full-year earnings outlook.

As part of its cost-cutting plan, Nike aims to simplify its ⁣product assortment, increase automation and technology usage, streamline its organization by reducing management layers, and leverage its scale for greater efficiency. ⁢The savings generated from‍ these initiatives will be reinvested to ⁢drive future⁤ growth, accelerate innovation,⁤ and enhance⁣ long-term profitability.

The company estimates that ​the restructuring efforts will result in pretax charges of $400 million to $450 million, primarily related to employee severance⁤ costs. Earlier this month, ⁢it was reported that Nike had been quietly‍ laying off employees across various divisions,⁤ signaling a broader restructuring plan.

In the second quarter ‌of its fiscal year, Nike exceeded earnings expectations but fell‍ short of sales estimates ‌for the second consecutive quarter. This is the‌ first time since 2016 that Nike⁤ has experienced ⁣consecutive quarters ⁢of‌ missed ‍sales estimates. The ⁢company reported earnings‍ per share of $1.03, higher than⁤ the expected 85 ​cents, and revenue of $13.39 billion, slightly lower ‌than the ⁣anticipated​ $13.43 billion.

Nike’s gross margin, which had been declining for the past six quarters,‌ saw⁢ a turnaround in the latest quarter. It ​increased by 1.7 percentage points to⁢ 44.6%, slightly surpassing estimates. This ⁢improvement can be attributed ⁣to a better inventory position compared to the previous year ‍when​ Nike ‍had to clear out old stock to make room for new products.

The retail industry has been facing intense competition and promotional activity, ​leading to ⁢steep discounts and markdowns. Nike’s strategic pricing​ actions and lower ocean freight costs contributed to the increase in gross margin, although⁢ they were partially offset by ‌unfavorable exchange rates ‍and higher input costs.

As one ​of the last retailers to report earnings before the holiday season, Nike’s performance will be closely⁤ watched by investors and consumers alike.


Maintain Your Horses! A Space Bitcoin ETF May perhaps well also Already Be Priced into Crypto.

There is a growing belief that the recent price surge in bitcoin could already factor in the potential approval of a spot Bitcoin ETF- a pivotal strategic investment move that holds significant influence in the crypto market. Investors and financial enthusiasts alike are keenly awaiting regulatory approval, a decision that could potentially catalyze the future growth trajectory of bitcoin prices. This speculation underscores not only the potential value that bitcoin holds as a digital asset but also the evolving role of institutional reactiveness in the cryptocurrency landscape.

Tim Draper’s Bold Prediction: Bitcoin (BTC) Price Set to Skyrocket to $250K!

In the world of finance, Bitcoin is increasingly recognized as a transformative force. With the potential to challenge...

Bitcoin ETF: Navigating the Perils of SEC Rejection and Fierce Opposition from Funds

A recent court order has directed the Securities and Exchange Commission (SEC) to reconsider its denial of Grayscale's...

PGIM Launches Four Actively Managed ETFs

PGIM, the $1.2 trillion investment management arm of Prudential Financial, has introduced four actively managed ETFs, with three...