Nike Flags Revenue Decline Amid Restructuring, Tariff Impact; Quarterly Results Top Views

06:44 AM EDT, 03/21/2025 (MT Newswires) -- Nike ( NKE ) shares fell early Friday as the sportswear giant flagged revenue and gross margin declines in its fiscal fourth quarter amid tariff impact and the company's ongoing transformation efforts, while it reported better-than-expected results for the previous three-month period.

The athletic footwear and apparel maker anticipates revenue to be down at the low end of a mid-teens range in the ongoing quarter, reflecting unfavorable shipment timing in North America and foreign exchange headwinds, Chief Financial Officer Matthew Friend said during a late Thursday earnings call, according to a FactSet transcript. The current consensus on FactSet is for sales of $10.81 billion in the quarter.

"Our second half plan is in line with what we communicated last quarter with some shifts occurring between (the third quarter) and (fourth quarter)," according to Friend. "Looking ahead, we believe that the fourth quarter will reflect the largest impact from our Win Now actions and at the headwinds to revenue and gross margin will begin to moderate from there."

Fourth-quarter gross margin is forecast to decrease by about 400 basis points to 500 basis points, including restructuring charges from the same period last year, Friend said on the call. The guidance includes the estimated impact of newly implemented tariffs on Chinese and Mexican imports, according to the CFO.

Nike's ( NKE ) stock fell 6.3% in the most recent premarket activity.

In a client note emailed Friday, Truist Securities said the company is taking the "right approach" to speed up a potential return to growth and welcomed senior management's "sense of urgency" and "modest early wins," such as improvements in product, marketing and wholesale relationships. "In our view, this could prove to be a needed-clearing event and we believe that (Nike ( NKE )) remains an attractive story for those seeking a beaten-down name with a fundamental forward catalyst."

For the three-month period ended February, the company recorded earnings of $0.54 a share, down from $0.77 the year before, but ahead of the Street's view for $0.30. Revenue dropped 9% year over year to $11.27 billion, but topped the average analyst estimate of $11.02 billion.

"I'm proud of the progress we made against the key actions we committed to 90 days ago," Chief Executive Elliott Hill said on the call. "While we met the expectations we set, we're not satisfied with our overall results."

Revenue for the Nike brand slid 9% to $10.89 billion, weighed down by declines in footwear, apparel and equipment. North American sales moved down 4%, while Europe, the Middle East and Africa fell 10%. Revenue in China tumbled 17% while Asia Pacific and Latin America declined 11%.

Gross margin decreased by 330 basis points to 41.5% mainly due to higher discounts, more inventory obsolescence reserves and increased product costs, among other factors, according to the company. Selling and administrative expenses decreased to $3.89 billion from $4.23 billion in the prior-year quarter.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.