Nike Falls Apart

24/7 Insights

• The latest Nike Inc. (NYSE: NKE) quarterly results show it is no longer a growth company.
• Disappointed investors sold the stock down after the report.

For years, Nike Inc. (NYSE: NKE) has been the king of athletic apparel. In its stores, outlets like Footlocker, and online, Nike bested rival Adidas and smaller competition like Puma. Nike’s new earnings report shows that its position at the top of its industry is in trouble.

The results drove the stock through the floor, which meant, at one point, it plunged 15%. That may not be unusual, but the shares were already down 13% this year, while the S&P 500 is 16% higher. Nike used to be a growth stock, regarding revenue growth and stock price. Nike still describes itself as a “growth company” on the investor relations page of its website.

For the most recent quarter, revenue dropped 2% to $12.6 billion. Earnings rose from $0.67 per share to $0.99, but Wall Street expected better

The forecast for fiscal 2025, which has just started, shattered investor confidence. Nike said revenue could fall as much as 10% in the current quarter. CEO John Donahoe said, “Fiscal [2025] will be a transition year for our business.” Whatever that means, it is a bad omen.

Investors who have watched a company grow rapidly and consistently sell a stock down quickly when their beliefs are crushed. Nike has just done that, and investors remember their disappointments for a long time.

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