Nike’s performance is currently declining.

Nike, the largest sportswear brand in the world, is facing challenges such as rising competition, a consumer pullback in key markets, and strategy missteps. The company reported a 1% growth in sales last year and flat sales last quarter. Nike projects a 10% drop in sales next quarter as its classic brands slow down and it faces challenges in the online marketplace. This resulted in a 12% plunge in Nike’s stock during after-hours trading.

One of the challenges Nike is facing is a consumer slowdown for discretionary goods and tough competition from upstart running brands like Hoka and On. Customers are changing their behaviors, choosing basics and experiences like concerts and travel over expensive sneakers and athletic clothing. Hoka, a French brand known for its comfort-focused running shoes, is gaining popularity in the mainstream.

Nike’s effort to change its distribution strategy backfired as it reduced the number of traditional retailers it sells its goods to, focusing more on selling directly through its own channels, particularly online. However, this move hurt Nike’s sales, leading the company to re-include some of the retailers it initially cut out. Analysts believe that Nike underestimated the importance of third-party retailers and allowed competitors to partner more closely with them.

Overall, Nike is facing headwinds in the sportswear industry due to increased competition, strategic missteps, and changing consumer behaviors. The company is working to overcome these challenges and reignite growth in its sales and stock performance.