Skip to Content

Nike is in a slump

<i>Joe Raedle/Getty Images via CNN Newsource</i><br/>Shoes line the shelves at the Nike store in December 2021 in Miami Beach
Joe Raedle/Getty Images via CNN Newsource
Shoes line the shelves at the Nike store in December 2021 in Miami Beach

By Nathaniel Meyersohn, CNN

New York (CNN) — Nike posted sluggish growth as the largest sportswear brand in the world faced rising competition, a consumer pullback in its key markets and strategy missteps.

Nike’s sales grew 1% last year and were flat last quarter, the company reported Thursday. The company projects sales to drop 10% next quarter as the company’s classic brands slow down and Nike faces challenges in the online marketplace.

Nike (NKE) stock plunged 12% during after-hours trading.

Nike faces a consumer slowdown for discretionary goods and tough competition from upstart running brands like Hoka and On.

Customers are changing their behaviors, passing up discretionary purchases of expensive sneakers and athletic clothing for basics and experiences such as concerts and travel.

Nike is also facing new competition. Hoka, a French brand founded as a running shoe for hardcore marathoners that soon caught on in the mainstream, is growing thanks to its emphasis on comfort over traditional style.

Meanwhile, Nike’s effort to change its distribution strategy has backfired.

The company in recent years has slashed the number of traditional retailers it sells its goods to while shifting to grow directly through its own channels, especially online. Nike has said it can make more than double the profit selling goods through its own website and physical stores than it can through wholesale partners.

Nike has said it would focus its resources, marketing and top products on just 40 select retail partners, such as Dick’s Sporting Goods and Foot Locker.

But the change hurt Nike’s sales. Nike has since brought back some of the retailers it initially cut out.

“Nike took it too far and underestimated the importance of third-party retailers. This withdrawal opened the door for those retailers to partner more closely with other brands,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients Thursday.

The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

Article Topic Follows: CNN - Business/Consumer

Jump to comments ↓

CNN Newsource

BE PART OF THE CONVERSATION

KTVZ NewsChannel 21 is committed to providing a forum for civil and constructive conversation.

Please keep your comments respectful and relevant. You can review our Community Guidelines by clicking here

If you would like to share a story idea, please submit it here.

Skip to content