Nike's stock fell on Friday after the sportswear manufacturer reduced its forecast for fiscal year sales, citing Foot Locker as a major source of income.

Nike experienced over 11% closure. The retailer Foot Locker, which mostly sells Nike merchandise at its locations, saw a roughly 4% decline. Since its 12.8% decline on September 30, 2022, it was Nike's worst day ever.

(Photo : by Joe Raedle/Getty Images)
Nike's stock fell on Friday after the sportswear manufacturer reduced its forecast for fiscal year sales, citing Foot Locker as a major source of income.

Nike stated in its results release on Thursday that it has revised its fiscal year revenue growth estimate from mid-single-digit growth to 1% growth. Additionally, the corporation said that over the following three years, it will reduce expenses by up to $2 billion.

During the results call on Thursday, finance chief Matthew Friend stated that the revised outlook includes significant headwinds, "particularly in Greater China and EMEA." Additionally, he mentioned how the softening of digital traffic and the strengthening of the US currency have "negatively impacted second-half reported revenue versus 90 days ago."

According to TD Cowen analysts, "Nike needs improved marketing outside of basketball, streetwear, and lifestyle trends," lowering the company from outperform to market perform in a report on Friday. "Nike's higher end innovation isn't connecting at scale, and smaller competitors are upending the company's footwear and apparel market."

Analysts at Goldman Sachs continued to recommend buying Nike shares.

Although the company's report "provided ample fodder for bears," they also admitted that the company's current approach to key franchise life cycle management and the slowing growth momentum due to a more competitive and tougher macro environment would likely have an adverse effect on future sales momentum.

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Foot Locker's Effort to the Sneaker Culture

In an effort to reaffirm its connections to sneaker culture and some of the greatest players in the NBA, Foot Locker has simultaneously unveiled a new brand platform and holiday campaign. The record label Preacher's "The Heart of Sneakers" also highlights the brand's referee-like retail employees, called Stripers.

The theme of the brand's 2023 Christmas ad is the relationship between basketball and sneaker culture. In advertisements set to the tune of Wiz Khalifa's "Hype Me Up," Puma ambassador Ball teams up with Stripers to prep a court for night basketball with glow-in-the-dark paint, while Adidas spokesperson Edwards exhorts Stripers to hype up a young fan, video game-style. NBA stars, along with singer Enisa, appear in spots that demonstrate how Stripers bring "hype for the holidays."

The sneaker industry is expected to reach over $100 billion by 2026, according to Statista, and companies as different as Lexus and Foot Locker have already incorporated sneaker culture into their marketing campaigns. While Foot Locker invested in 2019 in StockX and GOAT, two such platforms, they have also eroded the sales channels of more established stores like Foot Locker.

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