Shares of sports gear companies Nike Inc (NYSE:NKE) and Adidas AG (OTCQX:ADDYY) fell sharply on Wednesday trading after footwear retailer Foot Locker shocked the market with a major profit warning.
Foot Locker, a leading US outlet for Nike and Adidas, posted a bigger-than-expected drop in second-quarter sales and reduced its guidance for the remainder of 2023.
The footwear retailer also swung to a $5 million loss, from a $94 million profit a year earlier, and hit pause on dividends, sending its shares 32% lower in pre-market trading.
In New York, Nike’s shares were down 4.4% at $97.04. Adidas, which specifically has a long-term strategic partnership with Foot Locker, fell just over 5% to €174.72 in Germany.
Foot Locker said it had seen a “softening in trends in July”, and is adjusting forecasts to “allow us to best compete for price-sensitive consumers”.
Gross margin declined by 460 basis points compared with the prior year, driven by an increase in promotional activity, which included higher markdowns, as well as occupancy deleverage.
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