Nike shares dropped nearly ten percent in premarket trading on Friday following a dismal quarterly report and a warning from CEO Elliott Hill that weak market conditions will persist, dragging down competitors including Lululemon, On, Under Armour, and Deckers Outdoor.
Investors across the sportswear sector felt the shockwave on Friday, as Yahoo Finance reported that a bleak financial update from Nike sent ripples through its primary rivals. Shares of Lululemon, On, Under Armour, and Deckers Outdoor all fell during premarket trading as the market absorbed both Nike’s raw financial figures and its cautious outlook for the months ahead.
Elliott Hill Warns of Persistent Market Weakness
The sell-off was driven in large part by commentary from the top executive suite. According to comments from Nike CEO Elliott Hill, the sportswear market faces ongoing softness in the medium term, forcing the company to discount slow-moving merchandise—a strategy that threatens to pressure competitors into similar markdowns.
Hill detailed the steep declines hitting key product lines during an earnings call, pointing to strategic reductions alongside softer-than-expected demand.
Nike Sportswear, which accounted for just under half of this quarter’s revenue, was down low double digits. The decline reflected a combination of deliberate actions, product underperformance, and broader marketplace pressure. The first factor was one we expected. As planned, we reduced revenue from the Dunk by nearly 50% in the quarter. That resulted in roughly $200 million headwind in sportswear. In addition, some aged, higher-volume sportswear footwear sold through below expectations. Looking ahead, that has impacted our future order books as we proactively work with our wholesale partners to work through excess inventory to create a healthy marketplace.
Elliott Hill, CEO of Nike
Steep Revenue Declines Across Key Segments
Beyond executive commentary, Nike’s raw financial metrics proved severe enough to make competitors question their own inventory health. Overall Nike Brand sales fell 4%, while online sales plunged 13%. Converse sales suffered a sharp 28% drop, and sales in China crashed 26%.
Compounding the grim financial picture, the company signaled that a fresh round of major layoffs is on the way. Prior to the report, Nike shares had already fallen 76% over the past five years, and the latest figures triggered an immediate premarket drop of nearly 10%.
Analyst Lowers Outlook as Weak Fiscal Year Guidance Worries Investors
Adding to investor anxiety, Nike’s earnings guidance for the full fiscal year landed well below analyst estimates. Market watchers remain hesitant to call a turning point for the stock.
We are not ready to call a bottom yet with shares trading at 28x P/E at the midpoint of FY27E guidance,
said Stifel analyst Peter McGoldrick.
