Nike shows sales strength; profit falls short of estimates

BLOOMBERG

Nike Inc fell the most in the Dow Jones Industrial Average after the athletic-gear maker’s outlook for the full year failed to win over Wall Street.
Full-year revenue for fiscal 2024 should grow in the mid-single digits, led by its direct-to-consumer business, Chief Financial Officer Matthew Friend told analysts during a conference call. Analysts project growth of close to 6%, according to estimates compiled by Bloomberg.
The company reported sales that outpaced Wall Street’s expectations while profit fell just short of estimates. The results show Nike is still working to sell off its high stockpiles of merchandise that have eroded profitability.
“Overall, Nike is a solid brand, and it is not suffering from an existential crisis,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients.
“However, it isn’t on the front foot either, and has to accept that the year ahead will be one of resetting, retrenching, and reformulating the way it does business.”
Total revenue rose 5% to $12.8 billion in the fiscal fourth quarter through May, above Wall Street’s expectation of $12.6 billion. Gross margin — a key gauge of profitability — was also higher than expected, while earnings per share fell a cent short of Wall Street’s average estimate.
Chief Executive Officer John Donahoe has been selling through excess merchandise with discounts, which has weighed on margins. Inventories rose slightly in the quarter compared with the prior year period.