Nike Inc (NYSE:NKE) shares are dropping Tuesday in sympathy with Dick’s Sporting Goods, after the retailer reported worse-than-expected second-quarter results and flagged a challenging environment for athletic footwear and apparel.
Nike shares are experiencing downward pressure. What’s driving NKE stock lower?
Dick’s Cuts Guidance as Foot Locker Turnaround Reverses
Shares of Dick’s Sporting Goods Inc (NYSE:DKS) sank by more than 28% Tuesday after management slashed full-year profit expectations, driven largely by a reversal at Foot Locker, the sneaker chain Dick’s bought for $2.5 billion less than 12 months earlier.
Foot Locker posted a $31.9 million segment loss for the quarter, a stark reversal from the $110 million to $150 million in annual profit executives had guided toward just three months prior, and comparable sales at the chain fell 3.6% after rising 0.6% the prior quarter. Executive Chairman Ed Stack cited a more promotional retail landscape along with Foot Locker’s heavy exposure to sneaker drops, throwback releases and older shoe models as the main factors behind the shortfall.
