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Shoes are lined up on shelves at a Nike store on December 21, 2021 in Miami Beach, Florida.
new york
CNN
—
Nike, the world’s largest sportswear brand, has seen its growth slow as it faces increasing competition, declining consumer numbers in key markets and strategic missteps.
Nike Inc.’s sales grew 1% last year and were flat last quarter, the company said Thursday. The company now expects sales to fall 10% next quarter as its staple brands slow and Nike faces challenges. Online marketplace.
Nike (NKE) shares plunged 12% in after-hours trading.
Nike is facing sluggish spending on discretionary goods and stiff competition from emerging running brands such as Hoka and On.
Customer behavior is changing, eschewing discretionary purchases like expensive sneakers and sportswear in favor of basics and experiences like concerts and travel.
Nike also faces new competition: Hoka, the French brand that started out making running shoes for avid marathoners and quickly went mainstream, thriving by prioritizing comfort over traditional style.
Meanwhile, Nike’s efforts to change its distribution strategy backfired.
The company has in recent years significantly reduced the number of brick-and-mortar retailers through which it sells its products, while shifting to grow directly through its own channels, particularly online. Nike has said it can make more than twice as much profit selling products through its own website and brick-and-mortar stores than through wholesale partners.
Nike said it would concentrate resources, marketing and core products on 40 select retail partners, including Dick’s Sporting Goods and Foot Locker.
However, the change hurt Nike’s sales, and the company has since reinstated some of the retailers it initially withdrew from the program.
“Nike overreached and underestimated the importance of third-party retailers. This exit paves the way for these retailers to partner more closely with other brands,” Neil Saunders, an analyst at GlobalData Retail, said in a client note on Thursday.
