Nike is no longer growing – Economy

American sporting goods giant Nike is no longer growing. The company's global sales ahead of Adidas in the fourth quarter of 2023/24 (as of the end of May) were at the previous year's level of $12.6 billion (adjusted for currency effects), Nike announced on Thursday evening. Analysts on average were expecting $12.8 billion. In the USA in particular, Nike faces competition from new brands such as Hoka from Deckers or On, backed by tennis star Roger Federer. The new strategy of relying more on direct sales without going through retailers did not work in the fourth quarter. And in this sector, of all places, sales were shrinking and margins were under pressure.

“We are addressing the challenges we face in the short term, but we are making progress in areas that matter,” said Chief Executive John Donahoe. Analysts believe it will take time for Nike to revive demand — simply because innovations and new product lines take time. Chief Financial Officer Matt Friend said the group had revised its outlook for the new fiscal year in light of the challenges.

“We are taking steps to make Nike more competitive and drive sustainable profitable growth.” Nike shares fell 4.7 percent after hours. It didn't help that fourth-quarter net profit was 45 percent higher than a year earlier, at $1.50 billion ($1.03 billion). Pricing initiatives combined with lower shipping and warehousing costs increased gross margin. Nike kept marketing spending steady, and administrative costs fell nine percent after the savings program.