Nike stock retreated late Thursday after the Dow Jones athletic retailer fell short of sales expectations for its fourth-quarter report.
Nike earnings accelerated for the fourth quarter in a row. The Dow Jones retailer reported a 50% increase in Q4 earnings to 99 cents per share. Revenue dipped 2% to $12.6 billion after sales growth slowed the last five quarters. Excluding restructuring charges, Nike earnings were $1.01 per share for the quarter.
FactSet expected earnings to increase 27% to 84 cents per share on a slight uptick in revenue to $12.86 billion.
Nike brand sales eased 1% to $12.1 billion while Converse revenue dropped 18% to $480 million. Nike brand footwear sales declined 4% for the quarter but apparel sales rose 3%. Equipment sales rose 34% in Q4.
Nike Direct revenue fell 8% to $5.1 billion, driven by a 10% decline in Nike brand digital sales and a 2% decrease in Nike-owned stores.
Wholesale revenue rose 5% to $7.1 billion. Meanwhile, the company's gross margin increased 110 basis points to 44.7%, driven by strategic pricing actions, lower freight rates and logistics costs, as well as lower warehousing expenses. The margin growth was partially offset by lower margins in Nike Direct and unfavorable changes to exchange rates.
Full-year earnings increased 15% to $3.73 per share, just ahead of estimates of $3.70 per share. Nike's 2024 revenue was essentially flat at $51.36 billion, and fell short of forecasts for a small bump to $51.63 billion.
Analyst Views On Nike Stock
Among top research firms, Oppenheimer reinstated Nike as a top megacap pick on Friday. JPMorgan rates Nike shares overweight.
Oppenheimer on Friday upgraded Nike stock to outperform, with a research note saying the retailer is "on the mend." Nike struggled over the past several quarters. A mix of unfavorable internal and external hindrances weighed on sales growth and profit expansion.
Although challenges persist, Oppenheimer notes near-term financial are now largely "de-risked" and poised to rebound gradually. The firm said a "turnaround is underway." It pointed to senior leadership efforts and a refocusing on product innovation and brand-building.
This could also be the last "bad report" for Nike, Oppenheimer added. The firm expects Nike revenue to rise 0.5%, a slight upturn after five quarters of slowing growth.
Still, it sees management moderating Nike's fiscal 2025 guidance due to turnaround challenges and a difficult macro backdrop. Still, more weak guidance is already largely discounted in the shares. That should position Nike for improving results starting in the second half of 2025, the firm wrote.
Oppenheimer said it is more constructive on shares in the intermediate to long-term. The firm lifted its price target on NKE stock to 120 from 110.
JPMorgan, however, was less bullish on the Dow retailer in the near-term. The firm on Thursday lowered its price target on Nike stock to 116 from 122. It cited "mixed" fieldwork ahead of the fourth quarter. The lowered target is still 23% above where shares traded on Tuesday.
JPMorgan expects Nike global wholesale revenue to increase 3%, which will likely be offset by a decline in direct-to-consumer revenues. The firm also lowered its revenue estimates for the Greater China region. JPMorgan also expects flat direct-to-consumer sales for North America in Q4. Still, its fourth-quarter EPS estimate was in line with consensus forecasts.
Sports In The Spotlight
Meanwhile, Nike is catching eyes again as a key sponsor amid a wave of summer sports. The NBA Finals wrapped up in mid-June with the Boston Celtics winning their 18th title in their Nike-made jerseys. The sports apparel company is also the kitmaker for France, England and Portugal — three of the four pretournament favorites for the Euro 2024. All three of the teams made it to the first knockout round for the soccer tournament.
And more of Nike's cleats and apparel will be on display in July as the world's top athletes compete in the 2024 Paris Olympics. The U.S. Olympic trials are underway this week. The opening ceremony for this year's Olympic Games will take place on July 26.
Nike Stock
Nike stock sliced 5.4% lower on results on Thursday's afterhours session. NKE closed a fraction higher Thursday, just above its 50-day moving average.
The shares have been among the worst performers in the Dow this year and are trading near early-April lows. Nike stock fell 13.3% so far this year through Thursday's close.
The company's Q2 forecast provided a soft sales outlook and the retailer announced a cost-savings plan to streamline the business. Executives during the company's Q3 call said they plan to lean into wholesale and retail channels, and pivot focus from its Nike direct and e-commerce channels.
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