Nike shares plunge 12% after warning of China, EMEA ‘headwinds’

On Thursday, Nike announced that it now projects just 1% in revenue growth for its fiscal year, which ends May 31, 2024. The company previously forecast mid-single-digit percentage growth in sales. Chief financial officer Matthew Friend blamed the drop on “increased macro headwinds particularly in Greater China and EMEA”.

Nike’s Greater China sales rose 4% on-year in the latest quarter, still coming below expectations. Sales in Europe, the Middle East and Africa rose 2%, which was also lower than expected. Revenue in North America, Nike’s biggest market, is down 4% compared to a year ago.

Nike reported total revenue of $13.4 billion for the quarter ending Nov. 30, up 1% from a year ago. Its net income was $1.58 billion, a 19% increase from the same period a year ago. The company’s gross margin increased to 44.6%, which was higher than analyst estimates. Friend called the quarter a “turning point in driving more profitable growth” for Nike.

Nike pointed to strong sales around big shopping events like Black Friday and China’s Singles Day, yet the company warned of “indications of more cautious consumer behavior around the world in an uneven macro environment,” and admitted that broadly sales “fell short of our expectations.”

China’s retail sales rose 10.1% in November year-on-year, up also from the 7.6% increase logged in October, yet still below analysts’ expectations. China’s consumers are looking for more value from their goods and services, leading to a slower-than-hoped-for recovery for companies banking on the country’s shoppers.

Cost cuts

Nike also announced $2 billion in cost cuts over the next three years, by simplifying its product lineup…