Nike’s Stock Hits Seven-Year Low Amid Revenue Declines

NEW YORK, NY — Nike Inc.’s stock fell to a seven-year low after the sportswear giant reported disappointing fiscal third-quarter earnings and warned of further declines in the fourth quarter. The stock, which has dropped 20% in March alone, now sits at a market capitalization of $96 billion amidst a challenging growth environment.

For the third quarter ending in February, Nike reported a revenue decline of 9% year-over-year, amounting to $11.3 billion, while earnings per share decreased by 30% to $0.54. The company recorded a gross margin drop from 44.8% to 41.5% as it attempted to clear inventory from legacy styles. CEO Elliott Hill indicated a tough quarter ahead, projecting a 14% decline in revenue and a drop in gross margins of 400 to 500 basis points, which could sharply impact profits.

Despite beating analyst estimates, investor confidence waned due to the company’s guidance suggesting an even tougher fourth quarter. Nike faces intense competition from upstart brands like On Holdings and HOKA, both of which have captured increasing market shares. ‘The competitive landscape is more challenging than ever, with new entrants rapidly growing,’ Hill noted during the earnings call.

Management does highlight some positive growth areas; the running segment showed potential with demand for the new Pegasus Premium style, and growth in Japan and Latin America signals that not all regions are struggling. However, overall performance, particularly in China, paints a troubling picture. Revenue in China plummeted 15% year-over-year, exacerbated by strong local competitors such as Anta.

Analysts are critical but cautious about the future. ‘Nike has the right strategies in place to turn things around, but it remains to be seen whether these efforts will suffice amid a challenging macroeconomic environment,’ said an industry analyst. Nike’s operating margins also hit a ten-year low of 10.3%, further indicating the struggles the company faces globally.

In the wake of the turbulent earnings report, investor sentiment is understandably low, as many wonder if this is an opportunity to buy, or a signal to avoid further investment in a faltering giant. Hill concluded, ‘While we have tough challenges ahead, our brand has the history and positioning to recover—if we can execute effectively.’

This situation may prove to be a pivotal moment for Nike, as analysts and investors closely monitor its strategic shift and market position over the coming months.