Nike’s management team, led by Chief Executive Officer John Donahoe, is facing growing criticism from Wall Street as a prolonged sales slump sparks the stock’s biggest rout since 2001. The world’s largest sportswear company sees revenue declining in the mid-single digits in the company’s current fiscal year, while investors had expected an increase. That has stoked concerns about waning demand and heightened competition from upstarts On and Hoka as well as longtime rival Adidas.
At least seven analysts tracked by Bloomberg downgraded their ratings on Nike stock following the earnings and guidance update. “Management credibility is severely challenged, and potential for C-level regime change adds further uncertainty,” Stifel analyst Jim Duffy wrote in a research note on Friday morning. Nike co-founder Phil Knight reiterated his support for Donahoe in a statement.
“I am optimistic in Nike’s future and John Donahoe has my unwavering confidence and full support,” Knight said, adding that he believes in the company’s plans. The shares fell as much as 21% on Friday — Nike’s biggest fall since 2001. As of 1:53 p.
m. (Eastern Time), the drop had wiped out nearly $29 billion in market value. The stock had already declined 17% over the past 12 months.
The lower guidance at Nike isn’t due to “a broader slowdown in the athletic footwear industry,” but rather “a lack of newness and proactive actions to reduce supply,” said Telsey Advisory Group analyst Cri.