Nike expects 10% drop in quarterly revenue as competitors catch up

Nike has said that it is expecting a 10 per cent drop in quarterly revenue following increased competition from new brands on the market. This includes On Running and Hoka.

This update has caused Nike’s shares to plummet by over 12 per cent in after-hours trading, potentially resulting in a €13.5 billion loss in market value if the decline persists on Friday.

Nike also informed its investors that the demand for its products has decreased in international markets, including China.

The company also revised its projections for the 2025 fiscal year downward. It reported an eight per cent decrease in its direct-to-consumer business, attributing the decline to some customers opting for more trendy, upstart brands.

In December, Nike revised its sales projections to anticipate only one per cent of growth for fiscal 2024 and revealed plans to implement cost-cutting measures amounting to €1.83 billion over the next three years. Much of this sum is said to have been relocated to marketing spending.

International media reports have emphasised the criticism received by the brand for its lack of innovation throughout recent years. While new releases were slowed down by the pandemic, analysts highlighted that the brand needs to come up with new shoe styles and not new colours.

Despite the criticism, Nike continues to have a positive outlook that new products and the marketing campaign at the Olympic Games will yield results and help it regain momentum.

For the sporting event, Nike unveiled 13 AI-generated sneakers which were co-created with athletes. Furthermore, athletes are expected to showcase new iterations of products, while a new Pegasus Premium model will be launched for consumers next year.

CEO John Donahoe noted that the Olympic Games offer the brand “a pinnacle moment to communicate [Nike’s] vision of sport to the world.”

Furthermore, Nike is currently sponsoring nine teams for UEFA Euro 2024. This includes big teams like England, France and Portugal, beating Adidas and Puma.