Nike tumbles as upstarts grab market share

Nike shares took a significant hit, plunging more than 12% in after-hours trading. The company announced it expects a surprising 10% drop in quarterly revenue, attributing this decline to growing competition from newer brands such as On and Hoka. This news sent Nike shares tumbling, potentially resulting in a $15 billion loss in market value if the losses persist into Friday. As the world's largest sportswear company, Nike also informed investors that it is experiencing weakening demand in international markets, including China. However, Nike remains optimistic that new products and a marketing campaign at 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. The company also revised its outlook for the 2025 fiscal year downward. It reported an 8% decline in its direct-to-consumer business, as some customers opted for more trendy upstart brands. '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,' said Neil Saunders, Managing Director of GlobalData Retail, in an interview with the BBC. The sportswear giant's strategy to sell its products through its own stores and website instead of through wholesalers like Foot Locker has negatively impacted sales, according to Reuters. 'Nike needs to get on the front foot again in terms of persuading people to buy its products,' Mr. Saunders added. Despite these challenges, Nike remains a dominant force in the sportswear industry. The company is currently the top sponsor of jerseys at the UEFA Euro 2024 football tournament, outpacing competitors like Adidas and Puma. Nike is sponsoring nine national teams, including England, France, and Portugal.