Nike shares slide 8% as switch to newer styles to squeeze revenue
Nike shares tumbled nearly 8% in early trade on Friday after the Air Jordan maker forecast a drop in sales in its first half as it replaces older styles with trendier sneakers in its fight for market share with newer brands.
The company plans to trim supplies of classic shoes such as its Air Force 1 and Pegasus, financial chief Matt Friend said on Thursday, to focus on reviving its running shoe category, as well as upcoming launches including its Air Max Dn.
«What we heard on this quarterly call was that the merchandise margin recovery was coming slower largely due to management actions (reducing core product lines) and that sales through 1H25 would remain in negative territory,» Barclays analyst Adrienne Yih said.
The brokerage cut its price target by a fifth to $114, the biggest on the Street after the results.
Investors also focused on executives' comments that Nike's years-long direct-to-consumer (DTC) strategy was not driving growth as expected. The world's largest sportswear maker is now looking to reengage with its wholesale partners.
«Nike's distribution strategy is all over the place. Problem is customers want to buy Nike everywhere so reducing wholesale dramatically seems like the wrong move in hindsight,» Jefferies analyst Randal Konik wrote in a note.
Sluggish demand in North America has also weighed on the company's DTC efforts. Rival Lululemon Athletica flagged a hit to its annual revenue and profit on Thursday, citing waning demand mainly in the region. Its shares were down 14%.
Nike shares
