Author: Ananya Mariam Rajesh
(Reuters) – Nike The company’s (NYSE:) shares fell 18.6% in early trading Friday after a forecast for a surprise drop in full-year sales fueled investor concerns about the pace of the sportswear giant’s efforts to stem market share losses to up-to-date brands like On and Hoka.
The company on Thursday forecast a mid-single-digit percentage decline in revenue for fiscal 2025, compared with analyst estimates of nearly 1% growth, dragging down share from rivals and sportswear retailers in Europe, the U.K. and the U.S. on Friday.
British sportswear retailer JD (NASDAQ:) Sports fell as much as 6.6% and German Puma shed 3%, while Adidas (OTC:) fell slightly after briefly rising almost 2%.
If current losses continue, Nike stock will suffer its worst day in more than two decades and lose nearly $27 billion in market value.
“Nike stock is headed toward remaining in the proverbial red hot box until new product innovation actually begins to surface and management regains investor confidence,” Wedbush analyst Tom Nikic said in a note.
To be sure, Nike has reduced sales of oversupplied brands, including Air Force 1, to curb a deepening sales decline as part of a $2 billion cost-cutting plan launched tardy last year.
Nike plans to launch versions of the Air Max and Pegasus 41 this year with a full-length ReactX foam midsole, a move that aims to improve sustainability and address concerns about stagnant innovation.
Sporting goods brands such as Hoka, Asics, New Balance and On had a 35% global market share in 2023, up from 20% in 2013-2020, according to an RBC research report published in June.
Nike’s U.S. market share in the athletic footwear category declined to 34.97% in 2023 from 35.37% in 2022 and 35.40% in 2021, according to GlobalData.
“They know where the problems are, but right now they are having trouble generating demand and it will be a transition period that will take some time in different markets,” said Morningstar analyst David Swartz.
SHOCK IN THE BOARD?
The company’s indigent results over the past year have led some Wall Street analysts to suspect possible changes in the company’s management before the fall investor meeting.
“In retail, if you have two bad quarters, you’re usually out,” said Jessica Ramirez, senior analyst at Jane Hall & Associates.
“I think (a change in leadership) is very necessary.”
CEO John Donahoe is in his fourth year of a five-year stint as Nike’s chief executive. The former CEO of eBay (NASDAQ:), who replaced Mark Parker, was hired to focus on strengthening the company’s sales in digital channels.
Nike did not immediately respond to a Reuters request for comment on potential management changes.
At least six brokerages downgraded the stock and 15 lowered their price targets.
