Nike Inc (NYSE:NKE) shares fell in after-hours trading as the latest results showed the sportswear giant is still struggling to turn better products into stronger sales.
Fourth-quarter revenue fell 1% to $11 billion, or 4% on a currency-neutral basis, with weakness in Greater China and Europe partly offset by growth in North America. It was the lowest sales total since early 2022.
Wholesale revenue rose 4% to $6.6 billion, suggesting Nike is making some progress in repairing relationships with retail partners. But Nike Direct fell 7% to $4.1 billion, hit by a 12% drop in digital sales and a 7% decline in Nike-owned stores. Converse revenue fell 32% to $244 million.
Net income came in at $1.07 billion, helped by a $986 million tariff-related refund. Gross margin rose to 49.2% from 40.3%, although it would have been roughly flat without the refund.
Full-year profit was down 3% at $3.1 billion.
The bigger issue was guidance, as Nike expects revenue to fall by low- to mid-single digits over the next two quarters, while earnings are expected to be "flattish".
Chief financial officer Matthew Friend said: "The environment around us continues to be volatile."
Nike is in the middle of a turnaround under chief executive Elliott Hill, who is shifting back towards retail partners after losing shelf space to newer rivals such as On, Hoka, Alo and local sportswear brands in China.
Analysts at Jefferies said: "This is the bottom", pointing "kernels" of encouragement such as better inventory control and growth in running and football.
"The China cleanup is progressing while the performance biz continues to scale. Sportswear and Jordan streetwear remain the overhang and will take time, but the core is stabilizing."
Running is "the clearest proof point", up by double digits for the fifth straight quarter helped by footwear share gains in North America and Western Europe, with football also up across georaphies, basketball "building", and training, tennis and golf "all chipped in".
Victoria Scholar at interactive investor said Nike had "firmly fallen out of fashion", with competition and weak consumer spending still weighing on the brand.
She said the results looked "respectable" at first glance, but said investors looked past that as guidance was "suggesteng little near-term improvement" and competition still building.
"Nike has been trying to leverage the World Cup to support its turnaround plans and build momentum through advertising and social media, however there’s a long way to go for Nike to revitalise its former dominance and trend chasing shoppers are notoriously fickle."
Shares in Nike were down 3.9% to $39.46 in pre-market trading on Wednesday, down by more than 35% so far this year.
