Nike suffered its biggest decline since 2001, losing nearly $23 billion in a single day.

Nike Inc. shares fell after the sneaker company’s full-year guidance missed expectations, fueling investor concerns about slowing demand and competition from new entrants. on And hokaand also his competitor Adidas AG.

The world’s largest sportswear company expects a single-digit decline in revenue for the current fiscal year, which began this month. Analysts had expected growth to be around 2% this year, according to estimates compiled by Bloomberg.

The stock fell 18% on Friday morning, its biggest drop in Nike since 2001. By 9:35 a.m., the crash had wiped out nearly $23 billion in market value. Shares have already fallen 17% in the past 12 months.

Other sports stores such as JD Sports Fashion Plc. And cougar They were dragged down. adidas Frankfurt shares rose early Friday morning, but shares later pared those gains.

After many years of dominance Nike is struggling to produce a popular shoe that will replace best-selling Air Force 1s and Dunk sneakers. Poor performance increases pressure on CEO John DonahueHe resorted to layoffs and other adjustments after an initiative to prioritize Nike’s own sales channels failed to deliver the promised levels of profit and growth.

In recent years, Nike It also reduced its reliance on retail partners, who in turn began to promote rival brands. A wave of competition from new brands such as About Holding AG and Hoka from Deckers Outdoor Corp.pushed Nike promise to prioritize sports, new products and wholesale partners.

The trajectory contrasts with the trajectory adidaswhose new CEO, Bjorn Guldenagain opted for retail partners and accelerated the introduction of new products such as retro sneakers. Sambawhich was a success and ushered in a new era of growth. It also increased the company’s focus on athletic performance.

Income Nike In the fourth quarter, they fell 1.7% to $12.6 billion, below average analyst estimates. Subsidiary Chatfamous for his sneakers Chuck Taylorwas the furthest behind as its revenue fell 18% due to weak sales in both North America and North America. Western Europe.

Donahue took over as CEO Nike in January 2020, after many years at the helm of technology companies such as ServiceNov Inc. And eBay Inc. Prior to that, he spent nearly two decades working for a management consulting firm. Bain & Company Inc.where he became CEO in 1999.

Some analysts have criticized Donahue’s approach to leadership. Sam Poser from Williams Trading recently claiming that current top managers Nike they lack the “instinct and experience that the previous team had.”

It left Nike According to Poser, in a “push model” situation, in which a company must try to persuade consumers to buy its products, rather than the opposite scenario, in which people fight to get their hands on the company’s shoes and clothes.

It’s a stark contrast to what the brand has endured for much of the past decade, during which it nearly doubled its revenue from $25 billion in 2013 to more than $50 billion today. While annual sales fell during the onset of the Covid pandemic in 2020, growth has otherwise been strong until recent quarters.

Now company executives are asking for patience as the company hopes to accelerate the launch of new franchises in the fitness and lifestyle categories in the second half of this fiscal year and then introduce more new products over the next two years.

“A recovery of this magnitude takes time,” the CFO said. Matt Friend during the company’s meeting with analysts. But he warned that the product mix change would hurt sales in the short term.

Managers Nike They blamed the slowdown partly on lifestyle brands, including BBC 1 And Nike DanksSales in the category fell for the first time since the start of the pandemic, when demand for casual wear surged.

According to the analyst James Grzinichfrom JeffriesThese problems could lead to double-digit declines in analysts’ earnings expectations for the company this year and next. Moreover, the era in which European shoe stocks followed Nike’s is crumbling.

adidas is now “the sports brand of choice for global investors” as it Nike And Lululemon Athletica Inc. They are losing momentum, Grzinich said in his note.

Weakness of the company’s own sales channels. Nike It’s also “a concern that the sportswear giant could alienate its core customers by lacking new products,” he said. Poonam Goyalanalyst Bloomberg Intelligence.

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