A shopper leaves a Nike store in the Magnificent Mile shopping district in Chicago with a purchase on December 21, 2022.
Scott Olson | Getty Images
Nike shares plunged on Friday after the sportswear maker cut its fiscal year sales forecast, with sneaker retailer Foot Locker also feeling the blow.
Nike fell more than 10%. Foot Locker, which relies heavily on Nike products in its stores, saw a decline of more than 4%.
Nike said in its earnings report Thursday that the company now expects revenue to grow 1% for the fiscal year, down from its previous forecast of mid-single-digit growth. In addition, the company wanted to reduce costs by more than $2 billion over the next three years.
The new outlook reflects increasing headwinds “particularly in Greater China and EMEA,” Chief Financial Officer Matthew Friend said on Thursday's conference call. He also pointed to slowing digital traffic and a stronger U.S. dollar that “negatively impacted reported second-half revenue compared to 90 days ago.”
“Nike needs improved marketing outside of basketball, streetwear and lifestyle trends,” analysts at TD Cowen said in a note Friday, downgrading the stock to “market perform” from “outperform.” “Innovations at the higher end of the range are not gaining widespread traction, while Nike is struggling with disruption from smaller competitors in footwear and apparel.”
Analysts at Goldman Sachs maintained their buy recommendation for Nike shares.
But they also acknowledged that the company's report “provided plenty of fodder for bears, with growth momentum slowing due to a tougher economy, pointing to a more competitive advertising market, and that the company is now talking more comprehensively about the lifecycle management of key franchises, which “will have a negative impact on future sales dynamics.”
—CNBC's Gabrielle Fonrouge and Michael Bloom contributed to this report.