On Thursday, Nike (NKE  ) reported its fourth quarter earnings, shares plunging more than 12% in after hours trading. Sponsoring nine national teams at the UEFA Euro 2024 football tournament, Nike is the top sponsor of jerseys in that arena, beating out its rivals like Adidas AG (ADDYY  ), but the overall vibe is that Nike just hasn't innovated enough with its products not being accompanied by the quality storytelling it built its success upon.

The world's largest sportswear maker by sales lowered its full year sales outlook, rattling the stocks of Foot Locker (FL  ) and Dick's Sporting Goods (DKS  ), as it seems even the upcoming Olympics Games won't be able to help it get out of its sales slump.

Nike Is Going Back To Embracing Wholesalers

Nike's strategy to drift away from wholesalers like Foot Locker and Dick Sporting Goods to sell its products through its direct channels of owned stores and website has hurt its sales, so the athleisure wear giant is trying to restore those relations. Its key retail partners, including Foot Locker and Dick's Sporting Goods have been openly optimistic about Nike's upcoming product launches and new innovations. Foot Locker noted that Nike is clearly back to playing offense.

Fiscal Fourth Quarter Highlights

For the quarter that ended on May 31, Nike reported revenue decreased by 2% to $12.61 billion.

Its direct-to-consumer sales were 8% down a YoY basis as they amounted to $5.1 billion, while wholesale revenues went up 5% as they amounted to $7.1 billion. The world's largest sportswear company also revealed it is struggling with weakening demand in international markets, including in China.

On a slightly better note, gross margins increased to 44.7% from last year's comparable quarter when it amounted to 43.6%.

A Lowered 2025 Fiscal Year Outlook

Nike projected a larger than expected sales decline after initially guiding for overall sales growth in 2025 that kicked off on June 1st and is deemed to be a transition year for its business, as phrased by the CEO John Donahoe . In fiscal 2025, Nike excepts revenue to go down by mid-single digits, including first quarter's expected 10% drop.

The World's Most Successful Sports Brand Story Needs To Regain Its Mojo

Throughout its fiscal 2024, Nike has been trying to restore its sales growth mojo but a weaker than expected quarter wrapped up a lackluster year. Nike is taking aggressive action to reorganize its inventory, hoping the Olympics will also help getting out of its sales slump, along with new products that are expected to boost financials by the end of the year, with meaningful and sequential improvements in the second of the year. What Nike never lacked is self-confidence, but the latest reported quarter undoubtedly highlighted the many challenges that gaslighting its well-known spirit.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.