Nike Shares Dropped 5% in After-Hours Trading Following Biggest Quarterly Sales Drop in a Decade

By Lucille McNamara On Oct 2, 2024 Last updated Oct 2, 2024

Nike Factory Store in Woodburn, Oregon | Credit: Rick Obst from Eugene, Oregon.

Nike saw its shares drop 5% in after-hours trading yesterday after the announcement that the company experienced its largest quarterly sales drop in at least a decade, excluding a brief decline during the COVID-19 pandemic.

Nike also withdrew its sales forecast, signaling company outlook uncertainty, and postponed an investor day scheduled for November 19 at which future business plans are unveiled. Nike has not held an investor day since 2017.

Nike sales decreased 10%, direct sales decreased 13%, and wholesale revenue decreased 8%.

Quarterly Sales Plummeted $11.6 Billion

Company sales plummeted $11.6 billion, or 10%, in the quarter ending August 31, and Chief Financial Officer Matt Friend told stock analysts that Nike is expecting a similar decrease in the current quarter ending on November 30.

But Friend told them there are positive signs for the future, with the company expecting a turnaround in the second half of the fiscal year, ending on May 31, and an increase in early orders of products.

Nike is the biggest company operating in Oregon but has been in a slump for months with staff cutbacks in a $2 billion cost-cutting attempt.

CEO John Donahoe Will Step Aside for Former Nike Employee

CEO John Donahoe will be stepping aside on October 14 for former Nike employee, Elliot Hill, who will try to set right one of the company’s most disappointing years. While Donahoe defied the impact of the global pandemic leading Nike to new heights, the momentum he built fizzled out and found him backtracking on several key initiatives.

A turnaround plan was announced by Nike in recent months, with Donahoe announcing that the decision was already showing signs of early momentum.

The plan focuses on improved storytelling, rebuilding the wholesale business, and getting products to the stores more efficiently. The company is also using third-party retailers to rebuild its sales pipeline.

Yesterday was Donahoe’s last earnings report. He will retain his position as CEO until Hill starts work and will remain as an adviser until January 2025.

Nike Stock is ‘In Limbo’

Now, according to Jefferies analyst Randal Konik, Nike stock is ‘in limbo’ while investors wait to hear what Hill has to say about his plans for the future of the company.

Announcing the withdrawal of the sales forecast for the second half of the fiscal year, company Chief Financial Officer, Friend, said the decision was made because of the CEO transition and the need to obtain input from the newly appointed CEO.