(BFM Bourse) – The comma group was forced to lower its growth target for its 2023-2024 financial year due to slumping demand. Its stock plunges on Wall Street while Puma and Adidas fall in Frankfurt.
In Greek the word “Niké” refers to the name of the Greek divinity of victory. But for Nike, which takes its name from this goddess, the publication of the quarterly accounts looks more like a defeat this Friday.
For several months, the sports equipment goods sector has been suffering from fears about demand and high inventory levels, particularly in the “wholesale” channel, i.e. sales via multi-brand stores. .
The results of the second quarter of Nike’s 2023-2024 financial year, which closes its accounts at the end of May, do not allay these concerns, quite the contrary.
The company’s revenues were up 1% to $13.39 billion, and down 1% excluding currency effects. The group narrowly missed the expectations of analysts, who expected revenues of 13.43 billion according to an LSEG consensus cited by CNBC. Wholesale revenues notably fell by 3% excluding currency effects. Earnings per share exceeded expectations, coming in at $1.03 versus a consensus of 85 cents.
Changing consumer behavior
But beyond the figures, the group’s tone on its prospects is worrying. “We are seeing indications that consumers are behaving more cautiously around the world,” explained the American group’s financial director, Matthew Friend, quoted by CNBC.
The leader mentioned in particular China in the broader sense (with Hong Kong and Taiwan) as well as the Europe-Middle East-Africa region. This slowdown in demand also spread to online sales, forcing the group to step up its promotions.
“We know that in an environment like this, when the consumer is under pressure and there is more promotional activity, it is the newness and innovation that drives the consumer to act,” Matthew Friend also said. .
As a result, Nike has slashed its growth forecast, now counting on an increase in sales of around 1% for its entire 2023-2024 financial year, whereas it previously expected a “mid-single digit” increase. , or between 4% and 6%. Before this announcement, analysts forecast an increase of 3.8% according to the LSEG consensus.
Puma and Adidas hit by ricochet
“Nike’s results were completely overshadowed by the disappointing outlook for the second half,” summarizes David Schwartz of Morningstar, who until then expected growth of 4% for the 2023-2024 financial year.
In addition, the company has decided to launch a plan to reduce its costs by 2 billion euros in cumulative costs over the next three years. This will involve increased use of automation and technology but also workforce reductions which have not been quantified by Nike. This cost reduction program will result in restructuring costs of between $400 million and $450 million.
“Innovation is necessary for the group to accelerate its sales,” comments Bank of America, which lowered its price target to 125 dollars against 130 dollars on the title (currently at 110 dollars).
As a result of these announcements, Nike plunged on the stock market, falling 11.7% in pre-opening trading on Wall Street. The American group is dragging other sports equipment manufacturers in its wake, notably its compatriot Under Armour, which plunges by 6.1%.
In Frankfurt, Adidas fell 5.4% while its enemy brother Puma lost 6.1%. “The correlation (between the different sellers of sporting goods, editor’s note) has been more limited in recent quarters, but the announcement weighs on Adidas and Puma,” summarizes a market operator, cited by Reuters.
Julien Marion – ©2023 BFM Bourse
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