Nike(NYSE: NKE) stock lost ground in Wednesday's trading. The footwear and apparel company's share price closed out the daily session down 2.9%, according to data from S&P Global Market Intelligence.
Nike stock posted another day of stock decline due to information contained in Foot Locker's second-quarter report and conference call. While Foot Locker actually beat sales and earnings expectations in Q2, the retailer announced moves it will be making in 2025 that suggest headwinds for Nike.
Foot Locker's store closure plans could be a bad omen for Nike
Foot Locker actually delivered some pleasant surprises with its second-quarter report. While the business posted a non-GAAP (adjusted) loss of $0.05 per share in the quarter, the performance beat the average analyst estimate's call for an adjusted loss of $0.07 per share.
The company also returned to delivering annual sales growth. Revenue rose 1.9% year over year to $1.9 billion -- beating the average Wall Street estimate's call for sales of $1.89 billion. Same-store sales rose 2.6% annually in the period, coming in ahead of the average analyst estimate's call for category growth of 1%.
However, while Foot Locker served up sales and earnings beats, the company announced plans to significantly reduce its store counts in some Asian and European markets. That's not a promising development for Nike, and the stock is now down roughly 24% year to date.
Did Nike's road to a comeback just get harder?
Nike shocked the stock market in June when it issued guidance suggesting that the business will see a substantial sales decline this fiscal year. The company guided for a roughly 10% sales decline in fiscal Q1 -- a period that concludes at the end of this month. Full-year sales for fiscal 2025 were projected to be down mid-single digits. Now, Foot Locker could be flashing another bearish signal.
With its Q2 report, Foot Locker announced that it plans to close its stores and e-commerce operations in South Korea, Denmark, Norway, and Sweden. The company anticipates closing 140 stores in Asia and 629 stores in Europe by the middle of next year.
Nike has been prioritizing its own e-commerce platforms and other direct-to-consumer sales avenues, but Foot Locker remains a key retail partner for the company. The footwear and apparel giant is facing pressures from smaller competitors, including On Holding and Brooks, and the shifting footwear retail landscape could mean that the industry giant continues to lose mindshare and market share.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Foot Locker. The Motley Fool has a disclosure policy.
