Gate News update: On April 1, the shares of U.S. athletic apparel giant Nike plunged 15.5%, falling to about $44.6, hitting a new low in more than a decade, while also recording the second-largest single-day drop in nearly 25 years. The selloff happened after the company released its third-quarter fiscal earnings report. Even though both revenue and earnings per share beat market expectations, its profitability and forward guidance clearly weakened, triggering a wave of market selling.
Notably, shortly after the earnings report was released, well-known financial host Jim Cramer publicly expressed an optimistic view of Nike’s prospects. The comments quickly spread on social media and were seen by some investors as a “contrarian signal.” Discussions around “Cramer going against it” have reignited, and even ETFs specifically designed to trade against his views have been brought back into focus by the market.
From a fundamentals perspective, Nike’s revenue this quarter was $11.28 billion, with earnings per share of $0.35. However, net profit fell year over year by 35% to $520 million, and the gross margin dropped to 40.2%. The company said that pressure from North American tariffs and increased promotional efforts eroded profit margins. Even more concerning for the market is the outlook: the company expects sales next quarter to decline by 2% to 4%, and revenue in Greater China may drop by about 20%.
In addition, Nike’s direct-to-consumer business continues to face pressure, with an overall decline of 7%, including a 9% drop in digital channels. Revenue for its subsidiary brand Converse plunged 35% and turned from profit to loss. CEO Elliott Hill’s turnaround plan remains in its early stage, but consecutive weak performance has undermined market confidence.
On the competitive front, On Running, Hoka, and Adidas continue to erode market share. At present, Nike’s stock price has retreated about 71% from its historical high, and the decline for the year is close to 30%. With expectations for profit recovery not arriving until after fiscal 2027, this industry leader is facing structural challenges, and the market remains cautious about its path to a rebound.
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