Nike share price dropping along with profits as it faces new competitors

It wasn’t long ago that everyone wore Nike or Adidas, now some of the world’s most iconic sportswear companies are in big trouble.

Traditional powerhouses of the sports shoe trade are seeing their market shares cut by old rivals and newcomers moving up the pack.

Athletic footwear and apparel giant Nike on Thursday reported a nine per cent decline in third-quarter revenues, as the company’s chief financial officer opens up about the impact of Donald Trump’s tariffs.

The results were better than analyst expectations but the struggling company’s share price nevertheless sank by more than four per cent in after-hours trading.

Nike’s share price has been falling in recent days. Picture: Google

The Oregon-based manufacturer posted revenues of US$11.3 billion for the quarter ended on February 28, down from the same period last year.

On a currency-neutral basis, revenues fell seven per cent.

Nike’s direct-to-consumer business, which include Nike-owned stores, recorded a steeper decline, with revenues dropping 12 per cent to $4.7 billion. Online sales were particularly hit, plunging 15 per cent.

The progress made on strategic priorities “reinforces my confidence that we are on the right path,” said Elliott Hill, President and CEO of Nike.

Nike has long had a foothold on major sports – such as the Premier League. Picture: Michael Regan/Getty Images

The slide continued on Friday, US time, with Nike dropping another 5.5 per cent.

Nike and Adidas have long dominated the sportswear and athletic shoes scene but analysis shows their grip has slipped in recent years.

Back in 2018, those two companies accounted for 63 per cent of all sales in the sportswear industry.

In 2023 it was just 51 per cent – 35 per cent for Nike and 16 per cent for Adidas – according to investment bank Morgan Stanley.

Meanwhile brands like Swiss running shoe innovators On have enjoyed rapid rises in sales and market value, The Economist reported in November.

Actor Zendaya is an ambassador for On.

The Swiss brand has seen huge growth. Picture: Instagram

On reported its revenue in the quarter to September 2024 grew 32 per cent year on year, and its most recent market value is US$14.75 billion.

It has teamed up with sporting and cultural icons like Roger Federer, FKA Twigs and Zendaya for its campaigns and recently announced a full-year gross profit margin of 60.6 per cent.

On and other manufacturers such as Hoka and established brands New Balance, Puma and Asics have made ground globally as Nike and Adidas shifted focus to selling through their own stores and websites.

Nike has faced growing competition. Picture: Getty Images

Nike chief financial officer Matthew Friend spoke about the impact of US President Trump’s tariffs on the company.

“We expect fourth quarter gross margins to be down approximately 400 to 500 basis points, including restructuring charges during the same period last year. We have included the estimated impact from newly implemented tariffs on imports from China and Mexico,” he said on a call with investors this week.

Mr Friend also said Nike was “navigating through several external factors that create uncertainty … including geopolitical dynamics, new tariffs, volatile for rates and tax regulations as well as the impact of this uncertainty and other macro factors on consumer confidence.”

– with AFP.