Nike has reported a 9% decline in sales for the most recent quarter, bringing revenues down to $11.27 billion. The company's net income stood at $794 million, translating to 54 cents per share, while its gross margin fell by 3.3 percentage points to 41.5%. These figures have fallen short of analysts' estimates, prompting concerns over the company's financial health and strategic direction.
Sales in North America decreased by 4% to $4.86 billion, and the Chinese market saw a significant 17% decline, with revenues at $1.73 billion. Additionally, wholesale revenue also dipped by 7% to $6.2 billion, while sales in direct channels dropped by 12% to $4.7 billion. Analysts expect further challenges as Nike's sales for the fiscal fourth quarter are projected to decline in the "mid-teens range," alongside an expected further reduction in gross margin between 4 and 5 percentage points.
In response to these challenges, Nike has announced a new collaboration with Kim Kardashian's intimates brand, Skims, to launch a product line called NikeSKIMS. This partnership aims to bolster Nike's position in the women's market and enhance competitiveness with brands like Lululemon, Alo Yoga, and Vuori.
"I'll start by saying I'm proud of the progress we made against the key actions we committed to 90 days ago. While we met the expectations we set, we're not satisfied with our overall results," said Elliott Hill.
The company's turnaround plan is progressing slower than anticipated due to new tariffs and declining consumer confidence. Despite these hurdles, Nike has made some headway in reclaiming market share and expanding its female customer base.
Matt Friend noted optimism for the future despite current setbacks.
"We believe that the fourth quarter will reflect the largest impact from our win now actions, and that the headwinds to revenue and gross margin will begin to moderate from there," Friend stated.
Nike's shares have felt the impact of these developments, falling more than 4% in extended trading. The year-to-date performance also shows a decline of over 5%.
The collaboration with Skims is seen as a strategic move to strengthen Nike's presence in the growing women's activewear market. The partnership is expected to provide innovative products that appeal to female consumers and offer competitive alternatives to rival brands.
As Nike navigates through economic challenges and shifting market dynamics, it remains committed to its strategic initiatives designed to regain momentum in key markets. The company continues to focus on innovation and product differentiation while adapting its business model to address external pressures.