Nike's running shoes and retail gains aid turnaround
Nike is showing signs of recovery through strong performance in its running shoe category and retail sales. The company's recent earnings have boosted its stock and intensified competition with rivals. This turnaround comes after a period of challenges in the sportswear market.
Nike Inc. reported positive developments in its latest quarterly earnings, highlighting gains in running shoes and direct-to-consumer retail as key drivers of its ongoing turnaround. Shares of the athletic apparel giant rose more than 10% in after-hours trading following the announcement on Thursday, reflecting investor optimism about the company's strategic shifts.
The running category, a cornerstone of Nike's portfolio, saw significant growth. Executives noted that innovations in running footwear, including popular models like the Pegasus and Vomero lines, contributed to a 7% increase in footwear sales for the fiscal fourth quarter. CEO John Donahoe emphasized this during the earnings call, stating, "Our running franchise is firing on all cylinders, delivering compelling products that resonate with athletes worldwide."
Retail performance also played a crucial role. Nike's direct-to-consumer sales, which include its own stores and website, climbed 4% year-over-year, outpacing wholesale channels. This shift aligns with the company's multi-year strategy to strengthen its owned ecosystem, reducing reliance on third-party retailers amid economic pressures. Overall, revenue for the quarter ending May 31 reached $12.6 billion, surpassing analyst expectations of $12.1 billion.
These results are putting pressure on competitors such as On Holding AG and Deckers Outdoor Corp., whose Hoka brand has gained traction in the running segment. Nike's renewed focus on performance products and digital sales is helping it regain market share after a sluggish period marked by inventory issues and shifting consumer preferences post-pandemic.
Looking ahead, Nike forecasts fiscal 2025 revenue to be flat to slightly up, with gross margins improving to around 45%. Donahoe added, "We're positioned to accelerate growth as we execute on our consumer direct offense and innovate across our sport categories." This outlook underscores Nike's efforts to navigate a competitive landscape where rivals continue to challenge its dominance in athletic footwear.