Nike's Shares Slide 9 Days Straight on China Demand Drop and Inventory Surge

Nike's Shares Drop as China's Consumer Growth Slows and Inventory Concerns Rise

Nike, the sportswear giant, has encountered a significant decline in its stock value for the ninth consecutive day, driven by a diminishing demand in China and a continual increase in unsold inventory.

According to Bloomberg, on the 22nd of the month, Nike's shares fell to $101.46 per share, marking its first nine-day continuous drop since its listing in December 1980. During this period, the company's market capitalization has diminished by a staggering $13 billion.

Miller Tabak, a US securities firm, commented on the situation, stating, "Investors are realizing that China's growth is slowing down. The absence of robust stimulus measures from the Chinese government is raising concerns about prolonged economic stagnation and its potential impact on global corporations."

Industry experts have observed that Nike's recent weakness can be attributed to a waning recovery in Chinese consumer spending and a surge in unsold inventory. In July, China's retail sales growth only reached 2.5%, significantly falling short of the market's projected 4% and highlighting the reality of these concerns.

Nike's efforts to manage excess inventory include announcing lower-than-expected earnings per share in its quarterly results at the end of June. The company continues to work towards selling excessive inventory at discounted prices.

Weighing in on this, Wedbush Securities expressed concerns about the impact of the strategy on profit margins, asserting that the increased promotions and price discounts to clear inventory could lead to lower profitability, dampening investor sentiment.

On a separate note, market observers are looking to the upcoming performance announcement of retailer Foot Locker next month, considering it to be a significant indicator for Nike. Foot Locker, which sources 65% of its sportswear from Nike, is expected to provide insights into the sportswear giant's future performance.