Business: Nike Inc. shares lost $27 billion in market value, the biggest drop in 13 years, amid growing criticism of a continued slowdown in sales. Shares fell 20 percent at 11:57 a.m. Friday trading. It was Nike’s biggest drop since 2001. The shoemaker’s stock has fallen 17 percent over the past year. Nike Chief Executive Officer John Donahoe and the management team have faced growing criticism from Wall Street over the company’s revenue decline. Nike, the world’s largest sportswear company, saw revenue fall in the company’s current fiscal year, while investors had expected a rise. This has raised concerns about a slowdown in demand and growing competition from upstarts On and Hoka, as well as Nike’s longtime rival Adidas AG. “
Management’s credibility has been severely challenged, and the possibility of a C-level regime change adds further uncertainty,” Stifel analyst Jim Duffy said in a research note quoted by Bloomberg Friday morning. “The incredibly disappointing guidance for fiscal 2025 has added significantly to the pressure on management,” said Neil Saunders, managing director at GlobalData. “Management has tried to sell a recovery story to investors, but is unwilling to back it up with positive forecasts.” Donahoe laid out a restructuring plan for Nike in December to cut $2 billion in costs over three years in the face of weak sales.
That includes a 2 percent reduction globally, including layoffs at its Oregon headquarters and its European hub outside Amsterdam. Donahoe described the current fiscal year as a “transition year” for Nike, as it begins a ‘multi-year’ cycle of introducing new products, with a focus on increasing the speed of getting products to consumers. Yet analysts still expressed concern that new products could take too long to arrive. Evercore analysts including Michael Binetti told Bloomberg that “truly transformational products won’t be rolled out until the fall of 2025.”
