According to gulfnews.com, increased marketing costs and slowed sales prompted the stocks tumble.
The world’s largest sporting-goods company’s stock fell 9.4 percent to $87.78, the largest decline since December 1, 2008. Camilo Lyon, an analyst for Canaccord Genuity Corp., said: “We would not be buyers of the stock because of concerns sales growth will slow and the risk that Nike will be left with a glut of inventory after the Olympics.”
Nike Chief Executive Officer Mark Parker responded to higher costs by introducing widespread price increases in an attempt to improve Nike’s gross profit margin, as sales also slowed in Europe due to a recession and government cuts that curbed consumer spending.
Smaller branches of Nike such as The Umbro and Cole Haan brands had a combined loss of $43 million before interest and taxes in fiscal 2012, and would lose up to $75 million if owned for all of 2013. Nike plans to sell both before the year is out.
Morningstar Inc analyst Paul Swinand put it all in perspective, saying, “With Nike, we are often used to things coming in better than expected. In this case, almost every line item came in a little worse than expected.”