Nike's warning after Thursday's close didn't just sink its own stock. In pre-market trading on Friday, October 2, Lululemon shares slid, and Switzerland's On Holding, Under Armour, and Hoka parent Deckers Outdoor were all dragged down with it — a sector-wide sell-off across athletic apparel.
Nike lit the fuse itself. The company now expects fiscal 2027 revenue to decline by a "high-single-digit percentage" — far worse than the 2.4% drop analysts had forecast. Nike fell 8.5% in extended trading Thursday, then slid nearly another 10% pre-market on Friday. The stock is down 44% to 45% this year, on track for the worst annual performance in company history.
The market read Nike's warning as a verdict on the whole category, not just one company. A DailyIQ report noted that investors interpreted CEO Elliott Hill's comments as signaling "broader market pressure" rather than any Lululemon-specific problem — the drop was pure sector contagion.
And Lululemon and Under Armour had already been flashing red. Lululemon lowered its fiscal 2026 guidance last month, citing a tough market and sustained brand pressure; Under Armour cut its full-year revenue outlook in August on weak demand in North America and Asia Pacific. The athletic consumer industry faces a triple headwind: fast-shifting consumer tastes, intensifying discount wars, and macro uncertainty weighing on discretionary spending.
Analyst patience with Nike is running out. UBS retail analyst Jay Sole wrote after earnings on "why it's still not time to buy Nike," keeping a Neutral rating and cutting his 12-month price target to $34 from $42, warning that Nike's downward earnings-revision cycle may persist. Bank of America's Lorraine Hutchinson downgraded the stock just last week, saying the "turnaround is taking longer" than expected.
The numbers are brutal: Nike has fallen from its November 2021 all-time high of $161.91 to around $36; Lululemon has dropped from $511.29 in December 2023 to about $96. Both hit multi-year lows in September.
There's an irony in Nike's predicament: some of it is the blowback from its own strategy. Years ago, Nike deliberately cut ties with wholesale retailers to push its own stores and e-commerce — and handed shelf space to rivals. Deckers' Hoka, New Balance, and On Holding seized share in running and lifestyle sneakers. Now that Nike wants back in, there's no room left on the shelf.
Lululemon is also in the middle of a leadership reset. New CEO Heidi O'Neill is a former Nike executive who spent nearly three decades there. She inherits a mess: Truist analyst Joseph Civello says Lululemon's legging sales have dropped 20%, and the management change adds fresh uncertainty.
In the short term, the sector's mood will keep tracking Nike. The company has set its next storytelling moment for November's capital markets day, when management must present a turnaround roadmap the market can believe. For investors, the question has shifted from "when does Nike bounce" to "when does demand across athletic apparel come back" — and until then, there may be no safe corner of the sector.