By Kelly Cloonan

Nike's profit plunged in its latest quarter after sales fell 12% and the sportswear brand worked to clear aged inventory and crank up marketing to jumpstart its turnaround under a new chief executive.

Nike is in the early stages of an attempt to improve results and regain market share losses from rapidly growing competitors like Hoka and On Holding. Management had previously warned of a hit to profit in the fourth quarter amid restructuring and tariff-related charges, but said Thursday that it expects headwinds to ease from here.

Chief Executive Elliott Hill said Nike's results met expectations, but "they are not where we want them to be." He added the company expects improvement due to progress it's making on the turnaround and will align teams around a new plan it is calling the sport offense that focuses on creating distinct products with key sports and building comprehensive product portfolios.

The sneaker and athletic apparel company on Thursday posted a fourth-quarter profit of $211 million, or 14 cents a share, compared with $1.5 billion, or 99 cents a share, a year earlier. Analysts polled by FactSet had forecast earnings of 12 cents a share.

Gross margins fell to 40.3% from 44.7%, in line with the company's guidance range, primarily due to higher discounts and changes in channel mix. Higher sports and brand marketing expenses also weighed on the bottom line as demand creation expenses rose 15%.

Revenue fell 12% to $11.1 billion, ahead of the $10.73 billion expected by analysts.

Direct revenue fell 14% to $4.4 billion, while wholesale revenue fell 9% to around $6.4 billion.

Sales in North America fell 11% to $4.7 billion from a year ago, driven by lower footwear sales. Sales in China and the Europe, Middle East and Africa region fell by 21% and 9%, respectively.

Under Hill, who returned to Nike in October, Nike has looked to clear out aged inventory and boost sales with new products amid tense competition in an increasingly crowded sneaker and athletic apparel space. The company has also returned to selling directly through Amazon and looked to reinvigorate wholesaler relationships after leaning into its direct-to-consumer channel in recent years.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

June 26, 2025 17:15 ET (21:15 GMT)

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