Nike (NKE) suffered a decreasing trend in its earnings per share after the news media focussed attention on working conditions in Nike’s Indonesian Factories. On October 17, 1997 “48 Hours” (CBS) broadcast a scathing report of conditions in Nike Factories in Indonesia. Confirmation of these reports by various agencies led to a “Boycott Nike” campaign.
Nike moved to improve conditions and repair the damage to its corporate reputation. These measures involved costs that caused a marked decline in Nike’s earnings per share growth (May 97). Nike was then hit with the first round of the Asian Flu, collapsing sales in Japan, China, Indonesia and throughout the Pacific Rim. You can see that the quarterly earnings per share broke the cyclical pattern in the quarter ending February 98 and declined significantly in May 98. The quarter ending August 98 looked much better but the annual EPS shows how much damage those two quarters did.