Nike shares tumble after warning that the sales slump is getting worse

Nike shares tumble after warning that the sales slump is getting worse

Nike Inc. shares fell after the world’s largest sportswear company issued a full-year outlook that missed expectations, reinforcing investor concerns about waning demand for the brand’s sneakers and apparel.

The owner of the Jordan and Converse brands sees revenue declining in the mid-single digits in the company’s current fiscal year, which began this month. Analysts had expected growth of about 2% this year, according to estimates compiled by Bloomberg.

The shares fell as much as 12% in extended New York trading. The stock had already declined 13% this year through Thursday’s close.

The softness Nike has reported in recent quarters is persisting as an attempt to focus on its own sales channels over wholesalers has sputtered. Sales on the company’s website, app and stores declined 8% in the company’s fiscal fourth quarter, missing Wall Street’s expectations.

Executives said part of the weakness is due to the underperformance of lifestyle brands, which include Air Force 1 and Nike Dunks, and have a high proportion of sales online. The lifestyle category’s sales fell for the first time since the start of the pandemic, when demand for casual attire took off.

Revenue in the fourth quarter fell 1.7% to $12.6 billion, missing the average of analyst estimates. A notable laggard was the Converse subsidiary, known for its Chuck Taylor sneakers, where revenue plummeted 18% due to soft sales in both North America and Western Europe. Sales in Greater China were $1.86 billion, beating the average estimate, while earnings per share also surpassed expectations.

The revenue slowdown is adding urgency to Nike’s efforts to speed up product development. “A comeback at this scale takes time,” Chief Financial Officer Matt Friend said during the company’s call with analysts. He cautioned that shifting the product lineup will erode sales in the short term.

Chief Executive Officer John Donahoe said that Nike will release new franchises in the fitness and lifestyle categories in the second half of its fiscal year. He said Nike’s product development division has added new methods to fast-track products.

Nike is facing heightened competition from upstarts such as On Holding AG and Deckers Outdoor Corp.’s Hoka running shoes.