Nike faces challenges with 10% drop in quarterly revenue

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Nike has said it anticipates a shock 10% decline in quarterly earnings as it faces rising competition from newer rivals such as On and Hoka.
Nike has said it anticipates a shock 10% decline in quarterly earnings as it faces rising competition from newer rivals such as On and Hoka.

Nike has said it anticipates a shock 10% decline in quarterly earnings as it faces rising competition from newer rivals such as On and Hoka.

Surprising Revenue Decline

Nike has announced an unexpected 10% drop in quarterly revenue, attributing the decline to increasing competition from emerging rivals like On and Hoka.

This news caused Nike shares to plummet over 12% in after-hours trading, potentially resulting in a $15 billion market value loss if the trend continues into Friday.

International Market Weakness

The world’s largest sportswear company also informed investors of weakening demand in international markets, notably in China. Despite these challenges, Nike remains optimistic about its future.

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The company is banking on new product launches and a significant marketing campaign centered around the upcoming Olympic Games in Paris to regain consumer momentum.

Olympic Opportunity

“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 plans to leverage the global platform of the Olympics to showcase its innovation and connect with a broader audience.

Lowered Fiscal Year Outlook

In addition to the revenue drop, Nike has revised its outlook for the 2025 fiscal year. The direct-to-consumer business saw an 8% decline as some customers opted for newer, trendier brands.

Neil Saunders, Managing Director of GlobalData Retail, told the BBC, “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.”

Strategic Challenges

Nike’s strategy of focusing on direct sales through its own stores and website, rather than wholesales like Foot Locker, has impacted its sales negatively, according to Reuters. Saunders emphasized the need for Nike to “get on the front foot again in terms of persuading people to buy its products.”

Gary Monroe

Gary Monroe is a seasoned contributor to the Los Angeles Business Magazine, where he offers insightful analysis on local business trends and economic developments. With a focus on Los Angeles' dynamic commercial landscape, Gary's articles provide valuable perspectives for entrepreneurs and business professionals in the city.

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