On Friday, shares in Nike dropped some 20%. That’s the worst day in Nike’s 4+ decades as a public company — a period that’s seen the athletic brand survive recessions, pandemics, supply chain issues, and scandals. The sharp fall came after the world’s most valuable provider of shoes and stuff-to-sweat-in forecast that sales are expected to drop about 10% in its current quarter.
As Nate Becker astutely observes, that is unusual for Nike not just because the company almost always grows its sales — which topped $51 billion last year — but because this quarter is an Olympic quarter. That means hundreds of Swoosh-adorned athletes will be trying to run, jump, climb, kayak, and pole-vault their way into the history books, to mention but a few of the 329 events that will feature in the upcoming Paris games. Per Becker:
An analysis of financial data going back to the 2000 summer games in Sydney shows that Nike’s sales during Olympic quarters have risen an average of 9.9%, slightly higher than an average of 7.9% during non-Olympic quarters. So a drop of 10% is especially abnormal.
So, why is Nike struggling so much?
The bad news for the company is that there isn’t just one factor being cited. Its classic footwear lines are struggling, demand in China is soft, sales and traffic to its digital properties are down, and the company is expecting to sell less to wholesalers. One factor, at least in its athletic shoe division, is the rise of competitors like On Running and Hoka — two brands that are at the forefront of the boom in “running culture”, as a growing number of communities come together across America, and indeed the world, to embrace the simplest of athletic endeavors.
