Hear
The fall was worse than expected. One day after presenting its financial results, in which it anticipated a possible slowdown in its business, the American company Nike registered the biggest drop in its shares on Wall Street in 23 years.
The sports footwear and clothing giant presented a slightly positive balance the day before yesterday for the completed fiscal year, which was from June 1, 2023 to May 31, 2024. In it, lThe multinational reported total revenues of US$51,362 million, which represented an increase of 0.3% compared to the same period last year. Meanwhile, according to the document, net profits rose 12.4% year-on-year, to US$5.7 billion.
According to the company’s report, revenue in North America totaled US$21.396 billion, down 1% year-on-year, while it increased by the same proportion in Europe, the Middle East and Africa, to US$13.607 billion. Meanwhile, sales grew by 4%, to US$7.545 billion, in China; and by 5%, to US$6.729 billion in Asia-Pacific and Latin America.
And most recently, in the fourth quarter of the fiscal period, Nike posted a net profit of US$1.5 billion, representing year-over-year growth of 45.5%. It should be noted that total revenues were US$12,606 million, 1.7% lower than the previous period.
However, during the conference call with analysts after the results were published, Nike Chairman and CEO John Donahoe warned that increased macroeconomic uncertainty and a worsening exchange rate have resulted in a deterioration in forecasts for the current fiscal year, which “will be a transitional year.”
In this sense, the company’s executive vice president and chief financial officer, Matthew Friend, quantified the decline in revenue during the year at around 5%, although the decline would be 10% in the first quarter. “This reflects more aggressive actions in the management of our classic footwear franchises, lingering challenges at Nike Digital, a softer outlook in China and a number of timing factors specific to the quarter,” he explained.
This led to a collapse in their shares. Today, Nike shares fell 19.49% on Wall Street, up to US$75.83 per share. At certain times, they even broke the 20% barrier. This collapse, during the morning, eliminated US$23,000 million in market value from the American company. This implied its worst decline in the last 23 years. It was a movement that had the entire market in suspense yesterday.
“We are taking on our short-term challenges while continually advancing the areas that matter most to Nike’s future: serving the athlete through performance innovation, moving at the pace of the consumer and growing the entire marketplace,” said John Donahoe, Nike president and CEO, in a press release. He added: “I am confident that our teams are aligning our competitive advantages to create greater impact for our business.”
This imbalance of Nike occurs within the framework of a economy with signs of cooling. Following a strong rebound in 2023, the U.S. Department of Commerce’s Bureau of Economic Analysis recently reported economic growth of close to 0.3% in the first quarter.
“The first quarter increase mainly reflected increases in consumer spending and housing investment, which were partly offset by a decline in inventory investment. Imports, which are subtracted from GDP, increased,” they explained in a statement.
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