Nike’s 2024 pressured by weak North American demand, inventory glut
Reuters
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At least seven analysts trimmed their fiscal 2024 expectations for Nike’s earnings per share since the beginning of June and 10 slashed their price targets on the company’s stock, ahead of its fourth-quarter results.
“Coming into this current calendar year … wholesale orders are weak at the moment,” said Morningstar analyst David Swartz, adding that declines in these orders will have a negative impact on Nike.
There have been heavier markdowns within sneakers in the United States, said Jane Hali & Associates senior analyst Jessica Ramirez
In March, Nike warned of earnings pressure amid its attempts to get rid of excess inventory through heavy discounts. It still reaped the benefits of rival AdidasKanye WestJordan
Sales to wholesale customers, which made up nearly 58% of total Nike Brand revenues in fiscal 2022, have been on the decline as retailers cut back on orders and become more prudent due to a drop in discretionary spending among shoppers.
In May, retailer Foot Locker, which has touted its ‘renewed’ relationship with Nike, also flagged declining sales, particularly for fashion-oriented sneakers.
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Still, analysts expect a stronger rebound in China to offset the hit to sales from cooling consumer appetite for higher margin products in the North American region and help retain its top spot as the world’s leading sportswear brand.
