US sporting goods manufacturer Nike: does not expect a turnaround in weak sales anytime soon. Revenue in the new fiscal year (to the end of May) is likely to decline by a mid-single-digit percentage, the company said on Thursday, as the US stock market closed at an analyst conference after presenting annual numbers.
Sales will decline by a high single-digit percentage in the first half and ten percent in the first quarter. Stocks then collapsed.
Nike shares fell more than 12 percent in U.S. trading. This will mean they will continue their recent poor performance in regular trading, which has already lost a sixth of its market value in a year. Rivals hit the German stock market on Friday Adidas: and: Cougar negative pressure.
Nike’s new forecast is worse than expected
At the end of March, Nike already warned about a weak start to the new financial year. At the time, the company was still targeting sales growth, at least for the full year. On average, analysts had expected revenues to rise at least two percent.
The new forecast is now significantly worse than expected, RBC analyst Piral Dadania commented. The new financial year will probably be only a transition year. Brook Roach from Goldman Sachs also spoke about the disappointing news.
Nike was already struggling with declining sales from previous quarters. According to CFO Matthew Friend, there are many reasons for this poor development to continue. Nike is fine-tuning less of its product range and therefore fewer advertising campaigns are expected, especially in the first half of the fiscal year. As a result, online businesses are likely to grow more slowly.
In addition, there would be greater economic uncertainty, especially related to China. Of particular concern to the company is the consumer environment In Europe, Africa and the Middle East remain a concern. The friend also expects stronger headwinds from adverse exchange rate effects.
Sales are down, profits are up
In the fourth quarter, sales fell nearly two percent to US$12.6 billion (about EUR 11.8 billion). Without currency effects, revenue would be stagnant. Last quarter, however, profits rose 45 percent to $1.5 billion. Among other things, Nike saved on administrative costs and had to pay less tax. Experts expected more in terms of sales and less in terms of profits.
Nike also paid a seven percent higher dividend to its shareholders last quarter and continued a billion-dollar share buyback program. In December, the sporting goods maker had already announced a cost-cutting plan designed to offset weaker revenue growth.