Nike’s stock took a major hit as the company forecasted a surprise drop in annual sales, leading to a 20 percent slump in its stock price on Friday, wiping out $28.41bn from its market valuation. The sportswear giant projected a mid-single-digit percentage fall in fiscal 2025 revenue, compared to analyst estimates of a slight rise. This news dragged down shares of other sportswear retailers across Europe and the US. Nike’s market share in the sports footwear category has also been steadily declining, losing ground to brands like Hoka, Asics, New Balance, and On.
To address the sales decline, Nike has implemented a $2bn cost-cutting plan and is adjusting its product lineup to offer more affordable sneakers to price-conscious consumers. The company is also launching new sustainable sneakers this year. The underperformance of the past year has raised concerns among analysts about a potential management shake-up, with some suggesting a change in leadership might be necessary.
CEO John Donahoe, in his fourth year at the helm, has received support from co-founder Phil Knight, who believes in Nike’s future plans. Despite the challenges, some analysts see Nike’s size and scale as a long-term advantage but emphasize the need for strong management execution. Following the stock downgrade by several brokerages, investors are cautious about Nike’s future performance and are closely watching for any potential changes in leadership.
Source
Photo credit www.aljazeera.com
