NIKE’S STOCK PLUMMETS 20% AMID CONCERNS OVER SALES DECLINE AND MARKET SHARE LOSSES

Sat 29 June 2024:

Nike’s stock experienced its worst day ever, plunging 20% and wiping out $28.41 billion from its market valuation, Reuters reported. This dramatic drop followed the company’s forecast of a mid-single-digit percentage fall in fiscal 2025 revenue, contrary to analysts’ expectations of a near 1% rise. Investors are worried about Nike’s efforts to curb market share losses to emerging brands like On and Hoka.

Art Hogan of B Riley Wealth suggests Nike is setting conservative sales targets to ensure they can exceed them. The forecast negatively impacted shares of sportswear retailers globally, with JD Sports and Puma experiencing significant losses. Nike’s US market share in sports footwear declined to 34.97% in 2023 from 35.37% in 2022.

Other brands such as Hoka, Asics, New Balance, and On have increased their global market share to 35% in 2023 from 20% during 2013-2020. To address declining sales, Nike has implemented a $2 billion cost-cutting plan and is adjusting its product lineup, including affordable sneakers and sustainable models.

Despite challenges, BMO Capital Markets analyst Simeon Siegel believes Nike’s size and scale are long-term advantages, though execution remains crucial. Speculation about a potential management shake-up has arisen, especially with CEO John Donahoe in his fourth year. Co-founder Phil Knight expressed confidence in Donahoe and the company’s future plans. Meanwhile, several brokerages have downgraded Nike’s stock and cut their price targets.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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