Nike's Warning Shakes European Footwear Stocks

Published: 2024-06-28 05:59:16 ET NKE

By Michael Susin

Puma, Adidas and JD Sports shares fell after U.S. peer Nike warned that sales for fiscal 2025 are expected to fall, lagging the industry.

Nike on Thursday said it expects revenue to be down in the mid-single digits for the year ending May 2025, blaming uneven consumer trends in the European, Middle East and Africa region, and planned declines of classic footwear franchises given fourth-quarter trends. Analysts polled by FactSet expected revenue growth of 1.4%, to $52.11 billion.

The gloomy outlook follows a guidance miss for the fiscal fourth quarter after the group saw sales of its lifestyle products--goods perceived by consumers as an expression of style, way of life and social status--decline amid a subdued economic environment and weakness in China.

The warning caused a read-across on the sector, prompting shares of the U.K. sportswear retailer JD Sports, one of Nike's European partners, to drop 4.1% to the bottom of the FTSE 100 blue-chip index. Shares of industry peer Puma are down 2.6%, and Adidas is trading flat after being down 0.7%.

Nike stock fell more than 14% at premarket trading.

The warning, however, could be a tailwind for its competitors, Citi analysts said in a note.

"We believe this cautious product management and more limited lifestyle product success will continue to present a headwind for JD Sports, but could create near-term opportunity for Adidas and Puma," the analysts said.

Write to Michael Susin at [email protected]

(END) Dow Jones Newswires

06-28-24 0559ET