**Nike’s Troubles Persist, Consecutive Losing Streak Nears Record**
Nike Inc., the sportswear behemoth, is facing a prolonged period of disappointing financial performance, with its consecutive losing streak approaching a record. This ongoing downturn is largely attributed to concerns stemming from China, as well as lingering inventory issues.
**China Concerns Weigh Heavily**
China, a crucial market for Nike, has been a major source of worry for the company. The country’s strict COVID-19 policies, including lockdowns and travel restrictions, have significantly impacted consumer spending and disrupted supply chains.
Nike’s sales in Greater China plummeted by 20% in its fiscal third quarter, marking the fourth consecutive quarter of decline in the region. This sharp downturn is a significant concern for Nike, given that China accounted for 19% of its total revenue in fiscal 2022.
**Inventory Woes Exacerbate Challenges**
Compounding Nike’s woes are ongoing inventory issues. The company has been grappling with excess inventory, particularly in North America, which has led to markdowns and reduced margins.
Over the past year, Nike’s inventory levels have surged by 44% to a record $9.3 billion. This inventory overhang is putting pressure on Nike’s profitability, as it is forced to discount prices to clear excess stock.
**Consecutive Losing Streak Nears Record**
Nike’s latest earnings report marked the eighth consecutive quarter of year-over-year revenue declines. This losing streak is inching closer to the company’s record of nine consecutive quarters of decline, which occurred during the 2008 financial crisis.
**Layoffs and Restructuring**
To address these challenges, Nike has announced plans to lay off approximately 2% of its workforce, or around 1,400 employees, as part of a broader restructuring effort.
The company is also implementing cost-cutting measures, including reducing its product offerings and streamlining its operations. Nike is aiming to improve its inventory management and become more efficient in its supply chain.
**Analyst Outlook**
Analysts remain cautious about Nike’s prospects in the near term, citing the ongoing uncertainties in China and the impact of inventory issues.
Matt Powell, a sports industry analyst at NPD Group, noted that Nike’s inventory problems are particularly concerning, as they could lead to further markdowns and margin pressure.
**Share Price Performance**
Nike’s share price has been underperforming the broader market in recent months, reflecting investor concerns about the company’s challenges.
Since the beginning of 2023, Nike’s stock has declined by approximately 20%, compared to a 5% gain in the S&P 500 index.
**Conclusion**
Nike is facing significant challenges, with concerns in China and inventory issues weighing heavily on its performance. The company’s consecutive losing streak is nearing a record, and analysts remain cautious about its near-term prospects.
Nike’s efforts to address these challenges, including layoffs, restructuring, and cost-cutting measures, will be closely watched by investors as the company navigates this challenging period..
