Since then, Nike, the world’s largest sportswear company, has announced its worst sales decline in its history. Revenue dropped to $11.10 billion, down 12% from $12.61 billion the same time last year. Even amid the downturn, the company was able to post earnings per share above analyst expectations. It actually ended up at 14 cents, beating that forecast of 13 cents. Nike announced a $211 million net income for the quarter. That’s a stark drop from last year’s eye-popping $1.5 billion, or 99 cents per share.
Taken together, the most recent financial results paint an uncharacteristic picture of Nike in trouble across a growing number of markets. North America’s revenue of $4.70 billion was down 11% compared to a year ago. Even with this drop, it was still above analysts’ expectations of $4.42 billion. At the same time, revenue from China came in at $1.48 billion, just short of the expected $1.50 billion.
That’s despite the fact, Nike’s Direct revenue fell a whopping 14% this quarter. This slump took a toll on digital sales, leading to a painful 26% drop. The wholesale segment was down as well, suffering a 9% drop. In one encouraging sign for the flagship brand, comparable sales at Nike-owned stores were up 2% over the quarter.
New data from Placer.ai shows alarming news on foot traffic to Nike stores. In April, their visits were down 10.2% month over month from this time last year. May offered a ray of optimism as the drop was a more modest 3.2%.
In the face of these challenges, Matt Friend, Nike’s Chief Financial Officer, expressed optimism regarding the company’s future performance.
“I am confident in our ability to navigate through this current dynamic and uncertain environment by focusing on what we can control,” – Matt Friend
Nike beat analysts’ earnings per share and revenue expectations. The company’s bottom line already took a deep hit, falling by an extraordinary 86% from a year earlier. This massive drop in profitability highlights the struggles the company is facing as it tries to steer through an incredibly challenging market environment.
Our analysts have called this quarter as the low point in Nike’s ongoing turnaround. Kraft Heinz According to recent media reports, Kraft Heinz Co. is scrambling to change its playbook and do some root cause analysis on why its sales are dropping.