On Friday, shares of Nike Inc (NYSE:NKE) plunged 12 per cent, after the company’s warning of tightening margins raised concerns of an industry-wide decline in profit due to an inflation-induced hit to consumer sentiment. The company said it was expecting full-year gross margin to drop 200-250 basis points (BP), as it was grappling with a strengthening dollar and ballooning inventory.

Nike shares fell to USD 84.20. The negative news from Nike comes at a time when the retail sector is struggling with a decline in discretionary demand amid higher inflation, setting up for more margin pain in the coming months as firms ramp up discounts.

If losses continue through the session, it would be Nike’s biggest one-day percentage drop since March 2020 and shave off about USD 17 billion in market value. Shares of rival Under Armour fell 4.1 per cent, while those of German peers Adidas and Puma plunged 5.5 per cent and 6.5 per cent, respectively. Footwear retailer Foot Locker (NYSE:FL) Inc fell 4.3 per cent.

Founded by Phil Knight and Bill Bowerman in 1964, Nike Inc is a multinational corporation, engaged in the design, development, production, and sales of footwear, apparel, equipment, and accessories worldwide. Headquartered in Oregon, it is the world’s largest supplier of athletic shoes and apparel.