Slumping Sales and Leadership Shift Send Nike Stock Tumbling
In a disappointing earnings report, Nike revealed a 10% decline in revenue, falling short of analyst estimates and sparking a 5% drop in its stock price after hours. The athletic apparel giant reported earnings per share of $0.70, beating expectations but marking a 26% decrease from the previous year.
The company’s struggles were evident in both its direct-to-consumer and wholesale divisions, with sales plummeting 13% and 8%, respectively. Nike’s CFO, Matthew Friend, acknowledged the challenges, stating, “A comeback at this scale takes time, and while there are some early wins, we have yet to turn the corner.”
Industry experts, such as Morningstar’s David Swartz, were not surprised by the lackluster results, citing Nike’s earlier warnings about a weak sportswear market and stagnant innovation cycle. The company’s failure to introduce new products and its decision to discontinue others have contributed to its struggles.
The earnings report comes on the heels of Nike’s announcement to replace CEO John Donahoe with Elliott Hill, a former executive, effective October 14. The news initially boosted Nike’s stock, but the company’s continued struggles have since erased those gains.
Nike’s stock has suffered significantly this year, plummeting over 25% prior to the CEO change announcement, due to concerns about slowing sales growth and increasing competition from brands like On and Hoka.
The athletic apparel industry has become increasingly competitive, with Nike struggling to keep pace. According to Swartz, “This industry in sportswear is much more competitive now than it was five years ago.”
Looking ahead, Nike expects revenue to decline 8-10% in the current quarter, weaker than initial expectations. The company has also postponed its investor day, citing no future date.
Analysts, such as Jefferies’ Randal Konik, believe the new CEO will not have a significant impact on Nike’s performance until fiscal year 2026, leaving the stock in a state of limbo.
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