Investors in sporting retailers were left spooked after Nike slashed its sales forecast and outlined plans to cut costs.
Shares in JD Sports – the self-styled ‘King of Trainers’ – fell 5.2 per cent, or 8.95p, to 165p, and Frasers Group, which owns Sports Direct, Jack Wills and Flannels, slipped 0.7 per cent, or 6.5p, to 922.5p.
JD Sports and Frasers Group both rely heavily on Nike sales, with some trainers fetching for as much as £120 a pair.
The sell-off came after Nike reported late last night that weaker demand in China, Europe, the Middle East and Africa had hit sales.
While its second-quarter sales rose slightly, the retailer warned that revenues are likely to be ‘softer’ over the next six months. As a result, Nike lowered its full-year sales forecast and warned that it wanted to save up to £1.6billion over the next three years.
Ticked off: Nike reported that weaker demand in China, Europe, the Middle East and Africa had hit sales
But efforts to streamline its business are expected to result in a charge of up to £354m this quarter. Shares in Nike initially plunged nearly 11 per cent on Wall Street while US peers Dick’s Sporting Goods lost 3.2 per cent and Foot Locker shed nearly 6 per cent.
Victoria Scholar, head of investment at Interactive Investor, said: ‘Nike has struggled amid the weak consumer backdrop, heavy promotions and discounts, sluggish online sales and a slowdown in demand from the world’s second largest economy, China.
‘Sports retailers have been more cautious in terms of their stock purchases too, weighing on Nike’s wholesale business.
‘While the US economy has thus far proven to be more resilient than expected, there are concerns about a slowdown coming through in 2024 which could hurt Nike.’ In the final trading session before Christmas, the FTSE 100 inched up 0.04 per cent, or 2.78 points, to 7697.51 and the FTSE 250 gained 0.3 per cent, or 59.98 points, to 19630.95.
Overnight in Asia, billions were wiped off Chinese internet stocks after the country’s regulator vowed to toughen up measures on gaming addiction in a set of newly released draft guidelines.
Concerns over the impact on earnings sparked a sell-off as Tencent, which owns the messaging app WeChat, suffered its biggest intraday fall since 2008.
Back in London, Harbour Energy marched ahead a day after it inked a near-£9billion deal to buy the non-Russian assets of German firm Wintershall Dea.
With Britain’s biggest North Sea oil and gas producer on course to become a major global player, investment bank Stifel upgraded its target price to 570p from 480p.
Shares accelerated 5.8 per cent, or 17.2p, to 312.7p.
Fellow North Sea producer Enquest has sold its 15 per cent interest in an oil field and another asset for £46m. Shares surged 8.1 per cent, or 1.15p, to 15.38p.
M&C Saatchi has scaled down its advertising division to streamline its operations.
The business agreed to sell its Hong Kong arm and reduce its stake in its Swedish unit from 70 per cent to 30 per cent. Shares rose 1.6 per cent, or 2.5p, to 160p.
Octopus Renewables Infrastructure Trust will find out next month whether its third approach to merge with a fellow green energy investor has been accepted.
It wants to join forces with Aquila European Renewables to become one of the largest renewable fund in the sector.
Aquila said it will consider the proposal alongside other options early in the New Year. Analysts at Stifel said the deal ‘could make a lot of sense’ but questioned why Octopus would make an announcement on the last day before Christmas and go public on ‘soft discussions’. Shares in Octopus rose 0.2 per cent, or 0.3p, to 89.8p. Aquila gained 5.5 per cent, or 3.5p, to 67.75p.
