By D. Maan, Jadetimes News
Nike Faces Challenges Amidst Rising Competition
Nike has announced it expects an unexpected 10% drop in quarterly revenue due to increasing competition from newer rivals such as On and Hoka. This news caused Nike shares to plunge more than 12% in after hours trading, potentially resulting in a $15 billion loss in market value if the decline persists into Friday.
The world's largest sportswear company also informed investors about weakening demand in international markets, including China. Despite this, Nike remains optimistic that new products and a marketing campaign tied to the upcoming Olympic Games in Paris will help the company regain momentum with consumers. "The Paris Olympics offers us a pinnacle moment to communicate our vision of sport to the world," CEO John Donahoe stated during the earnings call.
Nike has lowered its outlook for the 2025 fiscal year. The direct to consumer business declined 8% as some customers opted for trendier upstart brands. Neil Saunders, Managing Director of GlobalData Retail, commented, "There's a sense that Nike just hasn't innovated enough, it hasn't marketed enough, it hasn't told enough stories around its products." Nike's strategy of selling its products through its own stores and website instead of wholesale channels like Foot Locker has hurt sales. "Nike needs to get on the front foot again in terms of persuading people to buy its products," Saunders added.
Currently, Nike is the top sponsor of jerseys at the UEFA Euro 2024 football tournament, surpassing brands like Adidas and Puma. They are sponsoring nine national teams, including England, France, and Portugal.