Sneaker Stocks Trip After Nike’s Earnings Slide

Sportswear giant Nike (NKE) reported earnings and guidance that fell short of analysts’ expectations, sending a ripple through markets in the U.S. and Europe.

Footwear and sports equipment companies lost ground Friday. Skechers (SKX) shares ended the day 1% lower. UGG and Hoka-maker Deckers Outdoor (DECK) saw its stock drop 3.2% while retailer Foot Locker (FL) lost roughly 2.4% on the day.

European companies were also affected as investors pared bets on the U.S.-listed ADRs of German company Puma and UK retailer JD Sports.

New Nike Rivals Gain Ground

One of the concerns for investors has been the rise of new brands like On Holding and Hoka. Nike management said its direct sales declined 8% as customers shifted to trendier brand names.

Analysts at Wedbush said that Nike was now in the “proverbial penalty box until new product innovations actually start to manifest themselves and management regains investor trust.”

Some reports suggest that smaller rivals such as On Holdings (ONON) and Hoka are communicating better with consumers as Nike loses ground with Generation Z. Nike reported challenges in China as well as the Europe, the Middle East and Africa, indicating weakness outside the U.S.

Nike may ramp up its marketing efforts ahead of the Olympic games in a bid to halt a slide in its shares, which are down almost 30% year-to-date.

“The Paris Olympics offers us a pinnacle moment to communicate our vision of sport to the world,” CEO John Donahoe told analysts on the company’s earnings call.