Nike warning hits stocks prices of Lululemon, On, Under Armour, and Hoka maker Deckers Outdoor

Key Points:

• Nike reported a disappointing quarter with a 4% decline in brand sales, a 13% drop in online sales, a 28% plunge in Converse sales, and a 26% crash in China sales, leading to nearly a 10% fall in its shares during premarket trading.
• CEO Elliott Hill indicated that the weak sportswear market is expected to persist in the medium term, prompting Nike to discount slow-moving products and reduce revenue from key items like the Dunk by nearly 50%, creating pressure on the broader sector.
• Nike's full fiscal year earnings guidance fell significantly below analyst expectations, contributing to investor concerns about the health of Nike's competitors such as Lululemon, On, Under Armour, and Deckers Outdoor, whose shares also declined in premarket trading.
• The company signaled upcoming major layoffs and is proactively working with wholesale partners to manage excess inventory, reflecting broader marketplace challenges and deliberate strategic actions to stabilize the business.
• Despite the stock's 76% decline over the past five years, analysts remain cautious about calling a bottom, with Nike trading at 28 times earnings at the midpoint of fiscal 2027 guidance, highlighting ongoing uncertainty in the sportswear sector.