Nike stock dives following unexpected sales forecast decline

Al Jazeera carries an article about the worst day ever for the stock with losses wiping out $28.4 billion from Nike’s market valuation, Caliber.Az reprints the article.

Nike's stock took a significant nosedive due to an unexpected projection of declining annual sales, raising worries among investors about the company's ability to counter competition from emerging brands like On and Hoka.

The stock experienced its largest single-day decline ever, plummeting by 20 per cent on Friday and erasing $28.41 billion from Nike's market capitalization.

On June 27, Nike forecasted a decline in fiscal 2025 revenue in the mid-single-digit percentage range, diverging sharply from analysts' expectations of nearly a one percent increase.

Art Hogan, chief market strategist at B Riley Wealth, commented, "Nike is aiming to provide extremely cautious guidance, setting low expectations that they hope to exceed."

The forecast from Nike had a ripple effect on shares of competitors and sportswear retailers across Europe, the United Kingdom, and the United States on June 28.

British sportswear retailer JD Sports saw a decline of 5.4 percent by June 28 close, while Germany's Puma dropped by one per cent. Adidas, on the other hand, experienced a marginal increase in its shares.

Hogan added, "Nike has been facing pressure for several years now. With their valuation now reset to extremely low levels, there's an opportunity for them to attract sponsorship, but that's not something that will happen immediately, not this week."

According to GlobalData, Nike's market share in the US sports footwear category dropped to 34.97 per cent in 2023 from 35.37 per cent in 2022 and 35.4 per cent in 2021. Meanwhile, other sporting goods brands like Hoka, Asics, New Balance, and On collectively accounted for 35 per cent of the global market share in 2023, a significant increase from the 20 per cent they held from 2013 to 2020, as reported by a June research report from RBC.

To counteract a worsening sales decline, Nike has implemented measures such as reducing oversupplied brands like Air Force 1, as part of a $2 billion cost-cutting initiative launched late last year.