Shares of Nike (NYSE: NKE) fell as much as 5% early Wednesday, according to data provided by S&P Global Market Intelligence, then settled to trade down around 2.5% after Foot Locker announced disappointing quarterly results.
To be clear, there was no company-specific news causing Nike stock to decline today. Rather, it appears Nike is trading in sympathy with American sportswear and footwear retail giant Foot Locker. Shares of Foot Locker plummeted more than 30% early today after the company announced weak second-quarter 2023 results and suspended its dividend this morning.
Foot Locker warned that while its results were “broadly in line” with management’s expectations, it began to see softening retail trends and increasing price sensitivity from consumers in July. Naturally, this has spurred fears that such trends could extend to companies like Nike, which rely on their premium brand positioning and pricing power to drive top-line growth and maximize profits.
Investors still have some time to mull whether Foot Locker’s weakness is necessarily indicative of an impending disappointment from Nike, a globally diversified business that typically releases its own fiscal first-quarter results in late September.
In the meantime, however, Foot Locker is hardly the only retailer to voice concerns over current macroeconomic headwinds affecting consumer spending this earnings season. Given the gravity of Foot Locker’s sell-off today, it’s no surprise to see shares of Nike trading modestly down today.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Foot Locker and recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.
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