NKE - Nike Q4 Earnings: The Sneaker Leader That Missed The Innovation Train

2024-06-28 09:36:10 ET

Summary

• Nike reported Q4 FY24 earnings, with revenue growing 1% to $51.4B, driven by strength Performance products while profitability and cash flows improved.
• However, Lifestyle revenues declined in Q4, along with shrinking digital sales and uneven performance across geographies as macroeconomic uncertainty remains.
• The management has outlined that FY25 will be a year of transition as they refocus their innovation efforts on Performance products, while it optimizes its product portfolio and reignites brand momentum.
• While sales are expected to decline in the mid-single digits in FY25, I believe that its valuation multiple is still extended and will remain under pressure, making it a “sell”.

Introduction & Investment Thesis

Nike (NYSE: NKE ) reported its Q4 FY24 earnings on June 27, and the shares plunged over 10% as the retailer cut its full-year guidance and expects sales to decline in the mid-single digits in FY25. So far, the company has severely underperformed the S&P 500 and Nasdaq 100 YTD. During the earnings call , the management outlined that FY25 will be a year of transition, especially as the company tries to reposition itself with a renewed focus on innovation in Performance, while managing global macro uncertainty and uneven consumer trends....

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