Nike’s Fourth Quarter Revenue Failed to Keep in Line with Analysts’ Expectations

Nike Inc's revenue growth failed to keep in line with expectations. Additionally, the company's forecast for future orders also missed analysts' expectations. That highlights, the tough time which the sportswear company is going through to keep up with the competition from biggest rival Adidas and others, mostly true for North America.

Shares of Nike have dropped considerably this year dropping fifteen percent till now. It is the third worst performer on the Dow Jones Industrial Average and to make the situation worse shares dropped an added 4.2 percent to $50.85 during the extended trading hours following the weak future forecast.

A strong dollar hurt revenue of Nike in the fourth quarter which ended on May 31. It also affected its overseas sales. Nike said that clearing surplus inventory in North America had an adverse affect on sales and the company's margins which is likely to hurt the present quarter revenue as well.

Although, Nike dominates the market in its home turf North America, which is also its largest market but analysts say it is facing tough competition from Adidas, headquarters in Herzogenaurach, Germany. Even smaller rivals in the home market like Under Armour Inc are also adding to the competition.

Edward Jones analyst Brian Yarbrough said, "You are seeing more people moving towards Adidas." He added that Adidas was "making a comeback" with several of the U.S. retailers giving more shelf space to Nike's biggest competition.