SUBSCRIBE TO NEWSLETTER
Stay in the loop! Subscribe to our newsletter and gain access to exclusive insights, trends, and news from the world of business and leadership. Don’t miss out!
Nike stock plummeted by 20% on Friday following a surprising forecast of declining annual sales, intensifying worries among investors about the company’s ability to counter market share losses to newer competitors like On and Hoka.
Record Losses and Market Valuation Impact:
Friday marked the worst day ever for Nike’s stock, with the company losing $28.41 billion in market valuation due to the sharp decline.
Nike projected a mid-single-digit percentage decrease in fiscal 2025 revenue, contrasting sharply with analysts’ expectations of nearly a 1% increase. According to Art Hogan, chief market strategist at B Riley Wealth, Nike is strategically setting a conservative guidance to potentially exceed expectations in the future.
The bleak forecast dragged down shares of rival sportswear retailers across Europe, the UK, and the United States. British retailer JD Sports saw a 5.4% decline, while Germany’s Puma fell by 1%. Adidas’ shares saw marginal gains amidst the broader downturn.
Competitive Challenges and Market Share Decline:
Nike’s U.S. market share in the sports footwear category dipped to 34.97% in 2023 from 35.37% in 2022, continuing a trend from 35.40% in 2021, based on GlobalData analysis.
According to an RBC research report, other sporting goods brands such as Hoka, Asics, New Balance, and On collectively grew their global market share to 35% in 2023, up from 20% during 2013-2020, underscoring increased competition.
Strategic Adjustments and Product Innovation:
To combat declining sales, Nike initiated a $2 billion cost-cutting plan, reducing oversupplied brands like Air Force 1. Additionally, the company is launching new initiatives such as $100-and-under sneakers globally, targeting budget-conscious consumers.
Nike plans to introduce sustainable products like an Air Max version and the Pegasus 41 with a ReactX full-length foam midsole this year.
BMO Capital Markets analyst Simeon Siegel highlighted Nike’s size and scale as potential long-term advantages but emphasized the critical importance of effective management execution amidst current challenges.
