Shares of Nike Inc. (NYSE:$NKE) fell today, and the athletic footwear juggernaut can blame Foot Locker (NYSE:$FL) for that. During Friday’s early trading, Nike shares dropped as much as 5.7%, and stood down 4.6% as of 3:00 p.m. EDT.
Why is Foot Locker at fault? Well, Foot Locker disclosed weaker-than-expected quarterly results which ended up causing a domino effect of sorts. According to Foot Locker CEO Richard Johnson, his stores performed poorly this quarter due to a combination of “limited availability of new products in the market,” and “sales of some recent top styles [that] fell well short of our expectations.”
What Does This Mean?
That doesn’t bode well for Nike as it has a dominant position atop the global footwear market. For context, Nike brought in more than $6 billion in revenue from footwear last quarter, which represents almost 70% of total sales.
Meanwhile, Nike CEO Mark Parker dropped some hints that the company will discuss some of the innovation-centric issues about which Foot Locker management spoke.
“Through our Consumer Direct Offense, we’re putting even more firepower behind our greatest opportunities in Fiscal 2018,” Parker said during Nike’s Q3 2017 call. “It will be a big year for Nike innovation and we’ll bring those stories to life through deeper consumer connections in our key cities around the world.”
What Does The Future Look Like?
To be safe, Nike investors might want to wait until late September for more insight as to whether Foot Locker’s weakness carried over into the beginning of Nike’s brand new fiscal year. Meanwhile, because Nike shares are up almost 14% in calendar 2017 as of yesterday’s close, it’s not a total surprise to see a number of investors taking their profits off the table today.
Featured Image: depositphotos/@boggy22
