Nike faces challenges as shares take a hit from upstart rivals

In a surprising turn of events, Nike has announced a projected 10% drop in quarterly revenue, leading to a significant decline in its shares by over 12% in after-hours trading. This could potentially result in a loss of $15 billion in market value if the downward trend continues. The sportswear giant attributes this decline to increased competition from newer brands like On and Hoka, as well as weakening demand in international markets, particularly in China. Despite these challenges, Nike remains optimistic about its future prospects, citing upcoming product launches and a marketing campaign tied to the Paris Olympics as key drivers for regaining consumer momentum. However, the company has revised its outlook for the 2025 fiscal year and acknowledged a decline in its direct-to-consumer business, with customers gravitating towards trendier upstart brands. Industry experts have pointed out that Nike's lack of innovation and storytelling around its products may have contributed to its current predicament. Nike's decision to focus on direct sales through its own channels, rather than traditional wholesalers like Foot Locker, has also been highlighted as a factor impacting its sales performance. The company's stock plunge and reduced full-year guidance reflect the challenges it faces in adapting to changing consumer behaviors and the competitive landscape in the sportswear industry. Despite these setbacks, Nike is taking steps to realign its strategy and product offerings to drive sustainable growth in the long term.