Nike sinks as sales forecast fans growth concerns

June 29: Nike shares slumped 15% in premarket trading on Friday as a forecast for a surprise drop in annual sales amplified investor concerns about the sportswear giant ceding more market share to upstart brands such as On and Hoka.
The company on Thursday forecast a mid-single-digit percentage fall in fiscal 2025 revenue, compared to analysts estimates of a near 1% rise, dragging shares of rivals and sportswear retailers across Europe, the UK and the US on Friday.
British sportswear retailer JD Sports fell as much as 6.6% and Germanys Puma lost 3%, while Adidas briefly rose more than 1.5%.
"We think Nikes long-term growth and profitability trajectory is subsequently both unclear," Morgan Stanley analysts led by Alex Straton said, downgrading the companys stock to "equal-weight" from "overweight."
Nike has cut back on oversupplied brands such as Air Force 1 to curb a worsening sales decline as part of a $2 billion cost-cut plan launched late last year.
"They know where the problems are, but they e having trouble right now generating demand and it is going to be a transition period that is going to take some time in different markets," Morningstar analyst David Swartz said.    —Reuters