Ananya Mariam Rajesh and Juveria Tabassum
(Reuters) – Nike on Thursday forecast a surprise drop in revenue in fiscal 2025, driven by falling demand for its sneakers as consumers crave new brands such as On and Hoka, sending its shares down more than 12% in after-hours trading.
Nike (NYSE:) said it expects full-year revenue to decline by single digits. Analysts had expected growth of 0.91%, according to LSEG data. Fourth-quarter revenue also missed estimates.
The company’s shares, which have fallen 13% this year, will lose more than $15 billion in market value if losses continue Friday.
The Air Jordan maker’s efforts to boost sales through its direct-to-consumer channel, primarily in North America, have so far been unsuccessful as customers become more selective about what they spend on. Rival brands On and Deckers’ Hoka have taken market share from Nike with their more fashionable products.
Shares of the two companies also fell between 1% and 2% in after-market trading.
To stem its worsening sales decline, Nike has trimmed redundant brands like the Air Force 1, invested in making better running shoes—more cushioning under the midfoot for improved stability—and is planning a new iteration of its popular Air Max line. .
The company is also betting that this year’s Olympics will help it regain some market share by drawing attention to high-performance products such as the Alphafly 3 racing shoe and Pegasus running shoe.
“Nike is trying to sell the idea that it is reinventing itself,” said GlobalData analyst Neil Saunders. “But the numbers that they provided… for 2025 actually suggest that the company is in a bit of trouble and what they’re doing is just not going to be able to deliver next year.”
In North America, “we saw a decline in foot traffic to our factory stores this quarter, highlighting the increasing pressures consumers are feeling,” Nike Chief Financial Officer Matthew Friend said on an earnings call.
To attract price-conscious shoppers, Nike said it will offer an updated line of shoes priced under $100.
Nike’s 2023 US athletic footwear market share fell to 34.97% in 2023 from 35.37% in 2022 and 35.40% in 2021, according to GlobalData.
Weak demand in Nike’s international markets, including China, is also hurting sales, Friend said. Physical traffic in China fell by double digits during the March-May quarter.
Greater China accounted for 14.7% of Nike’s revenue in 2024; North America accounted for 42%.
“SERVING THE ATHLETE”
Ahead of the Olympics, Nike is promoting its roots in clean sport. The company previously said it would spend more on this Olympics than on any previous games.
“The Paris Olympics provides us with a critical moment to convey our vision of sport to the world. It’s driven by revolutionary innovation and announced with a can’t-miss advertising campaign,” said CEO John Donahue during the call.
He said Nike is “putting sport back at the center of everything we do, serving athletes.”
Among the bright spots in the fourth-quarter earnings report, revenue from Nike’s wholesale business rose 5%. However, consumer-facing business growth fell 8%.
Net revenue in the fourth quarter fell 1.7% to $12.61 billion, below estimates of $12.84 billion.
Nike’s $2 billion cost savings plan, including layoffs, also helped the company achieve adjusted earnings of $1.01 (highest estimate of 83 cents).
For the first quarter, Nike forecast revenue to fall about 10%, compared with expectations for a decline of 3.16%.