Nike (NKE) did only one thing on earnings day: remind investors why the stock is trading at record lows.
Shares of the fallen sportswear giant crashed 9.7% in pre-market trading on Friday, extending the plunge in a stock that had already dropped 76% in the past five years alone.
35.15 -0.25 (-0.71%)
At close: October 1 at 4:00:02 PM EDT
Nike’s quarter and earnings call were littered with brutal realities about how far the business has fallen and how difficult the road to recovery still is:
🛑Nike Brand sales: -4%
🛑Online sales: -13%
🛑Converse sales: -28%
🛑China sales: -26%
🛑Inventory: only down 3%
🛑Signals a major round of layoffs (again)
🛑Sales seen dropping high single-digit percentage FY27
🛑Earnings guidance well below consensus ($1.15 to $1.35 vs. estimates of $1.66)
“Overall, there’s a lack of energy in the lifestyle space right now, which is impacting traffic. Yes, the consumer is cautious. But as the leader in the industry, it’s on us to bring more creativity to sportswear,” Nike CEO Elliott Hill said on the earnings call.
Here is the vibe on the quarter and outlook from Wall Street.
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“We are not ready to call a bottom yet with shares trading at 28x P/E at the midpoint of FY27E guidance. The new Pace cost savings plan helps, and we expect it to be increased at the November investor day, helping paint a path towards a more tangible margin structure vs. the MSD% EBIT margin in FY27E. We recommend the challenger athletic footwear brands while NKE is off its game (DECK, ONON, WWW).” -Stifel analyst Peter McGoldrick
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“NKE’s F’1Q reinforced that the turnaround is progressing, with Performance continuing to scale while NA trends improve and profitability showing signs of stabilization. While China, Jordan, and Sportswear continue to weigh on results, mgmt’s deliberate actions and revised FY27 framework suggest greater focus on rebuilding long-term brand and marketplace health.” -Jefferies analyst Randy Konik
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“With yet another downward revision, the questions remain when guidance cuts will represent the band-aid rip versus slow bleed as they continue to debate the path potential stabilization ahead. With the November analyst day ahead, we would assume management likely preferred to get the “bad news” out of the way to offer up a more positive tone in person, but clearly there has been plenty of “bad news” to spare. Recognizing ongoing noise, we lower our Price Target to $50 (from $60). And though it certainly is not easy (and certainly has not been correct), we maintain our BUY rating amid increasingly negative sentiment and a potentially emerging catalyst path (potentially troughing estimates, new CFO, November Analyst Day).” -Guggenheim analyst Simeon Siegel
