Few investors felt like they were winning with Nike(NYSE: NKE) stock on Hump Day. One of its most entrenched and competitive rivals unveiled a set of preliminary annual results, and the numbers raised concerns about the immediate future of the athletic shoe and apparel market worldwide.
Nike shares closed the day 2.5% lower as a result, a steeper fall than the 1.6% decline of the S&P 500 index.
Adidas raises concerns about the international athletic-wear market
At least Nike isn't Adidas(OTC: ADDYY). The European company's preliminary full-year 2023 figures indicated a 5% year-over-year dip in sales and a 60% tumble in operating profit. More concerning was Adidas's guidance for the latter line item. Although it expects to nearly double the 2023 figure this year, its forecast of 500 million euros ($542 million) fell well short of the consensus analyst estimate.
Although Adidas attributed much of its 2023 declines to the previous year's discontinuation of its Yeezy fashion line with American musician Kanye West, investors clearly felt these were more reflective of the state of the general athletic gear and apparel market.
This market is a global one, with Adidas and Nike competing hotly for influence and business throughout the world. If conditions are weakening for one, they surely will affect the other. Nike's "sympathy sell-off," then, was entirely understandable.
Can Nike pull ahead with its advantages?
Nike isn't Adidas, of course, and it has numerous advantages over its longtime rival (being based in sports-crazy America, for one). With this latest development from the European company, though, all eyes will be on its third-quarter results. These should be unveiled around mid-March.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.
