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Nike shares fell 6% early on Wednesday after the company reported quarterly profits that topped the most bullish forecast on Wall Street but sales that slightly missed expectations.
Also, a key measure of future sales missed analysts’ expectations amid strong competition from companies like Adidas and an unsteady retail landscape.
On the earnings call, Nike said worldwide futures orders, which reflect demand from retailers, fell 1% excluding the foreign-currency impact. Analysts had forecast an increase by 3.4% according to Bloomberg. Last quarter, Nike decided to stop publishing futures orders in every earnings release, saying it would mention them during the earnings calls as it deems appropriate.
The company posted adjusted earnings per share of $0.68 on revenues of $8.4 billion. Analysts had expected Nike to report adjusted EPS of $0.53 and revenues of $8.47 billion.
Gross margin fell by 140 basis points to 44.5%. Higher selling costs and foreign-currency hits offset a higher average selling price, Nike said.
Ahead of the earnings, traders placed a record amount of bets that Nike shares would decline, according to S3 Partners. Short bets against Nike have climbed by $774 million, or 62% this year, and have crossed the $2 billion mark for the first time ever. Nike shares have fallen 8% over the past year. They shed as much as 2% in volatile after-hours trading following the earnings release.
Nike is vulnerable to any trade restrictions or tariffs implemented by President Donald Trump’s administration. The strong US dollar could also pose a problem as Nike looks to grow in China.