Could Nike's sales be a barometer to the industry?
27 December, 2022
It was all doom and gloom in September, when Nike reported a dip in sales, caused by hampered growth in China, where pandemic restrictions still reigned, and high inventory volumes that weren’t shifting. Whispers of merchandise being off-trend, meant the only way to shift stock was discounting.
At the time of the announcement, Nike’s shares tumbled more than 20 percent, which nearly halved in the year to date, as investors worried over a plethora of problems.
But as the world’s largest sportswear company, Nike may be a barometer to the rest of the industry. Despite its prowess and dominance in retail, it still has ups and downs, and manages to weather the storms when they appear.
A barometer to the rest of the industry
Fast forward three months and Nike has largely tackled its inventory problems, and last week reported quarterly sales which were above expectations, up 17 percent compared to the prior year. Stocks are back up and trading higher than in September, and the clouds of doom seem to be lifted and temporary, just like bad weather.
In an earnings call last week with investors, John Donahoe, Nike President and Chief Executive Officer, said: "We believe the inventory peak is behind us as actions we're taking in the marketplace are working."
Year-round discounting would be detrimental to Nike's business, but also to other large players, like Gap, American Eagle and Nordstrom, who also have large volumes of inventory to contend with. With Nike turning the corner, other retailers and brands will likely too.
Source: fashionunited.uk