Sales decline 12% but beat estimates; margins pressured by inventory strategy
Nike reported fourth-quarter results on Thursday that slightly beat Wall Street expectations, despite marking the company’s sharpest profit drop in years. The sneaker giant posted a net income of $211 million, or 14 cents per share, down 86% from $1.5 billion, or 99 cents per share, a year earlier.
Revenue fell 12% year-over-year to $11.10 billion, exceeding analyst estimates of $10.72 billion, according to LSEG. The earnings per share also came in just above forecasts of 13 cents. Still, Nike’s shares fell more than 2% in after-hours trading.
Turnaround pressures margins
Much of the decline stemmed from efforts to offload stale inventory through discounting and a renewed focus on wholesale partnerships. While these channels improve reach, they yield thinner margins compared to Nike’s direct-to-consumer sales. Nike Direct revenue declined 14%, with digital sales down 26% and wholesale down 9%. However, sales at physical Nike stores rose 2%, offering a modest bright spot.
“The fiscal fourth quarter represents the largest financial impact from our reset strategy,” said CFO Matt Friend. “I am confident in our ability to navigate through this current dynamic and uncertain environment by focusing on what we can control.”
Regional and product breakdown
All regions reported declines, though North America performed better than expected, with sales falling 11% to $4.70 billion — above the forecasted $4.42 billion. Revenue from China came in slightly below estimates at $1.48 billion versus $1.50 billion expected. The company is also facing pressure from rising U.S. tariffs on Chinese imports, which it’s attempting to offset through pricing adjustments.
Sneakers remain Nike’s primary revenue driver, but apparel accounted for roughly 28% of brand sales in fiscal 2024, positioning it as a key growth segment. The gender mix of customers remains an issue, as women currently make up about 40% of Nike’s consumer base — a figure the company aims to grow amid competition from Lululemon and Alo Yoga.
Outlook and what’s next
Investors are awaiting more clarity on Nike’s turnaround strategy during the upcoming earnings call, including guidance, expense control, and product pipeline updates. One notable delay is the company’s launch with Kim Kardashian’s Skims brand, which has now been pushed to later this year.
Store foot traffic may be stabilizing. Placer.ai data showed a 10.2% drop in April visits year-over-year, improving to just 3.2% down in May. Whether this momentum continues will be critical as Nike tries to re-engage customers and reset its digital and wholesale strategy.
