Nike Shares Drop as Demand Softens

Athletic gear giant Nike watched the value of its shares tumble almost 5 percent today after it released a report outlining its pessimistic outlook and underperformance. Nike blames this drop on a disappointing decrease in forward orders, especially in Europe, and a falling demand for athletic gear thanks to the recession.

Nike has not denied that this year, and even next year, will be difficult, assuring analysts that the company expects to barely turn a profit, if that. Still, Nike’s CEO, Mark Parker, acknowledges that Nike will eventually recover, even though it is on a much longer path to recovery than other companies.

Like many other businesses, Nike has resorted to cutting costs in order to increase profit. In addition to global job cuts, Nike has spent less money on advertising and manufacturing. These measures come at a time when Nike’s earnings have fallen from $490.5 million last year to $341.4 million this year.

Nike (Image: Flickr)