Nike skids after warning on squeeze from higher discounts, stronger dollar
The company’s shares, already one of the worst performing Dow components for the year, fell 10% in extended trading.
“We’re going to see substantial markdowns this year through the holiday season. But going into the calendar year 2023, I believe inventories will be much lower after the holiday sell through and then the post holiday sales,” Morningstar analyst David Swartz said.
Overall inventories surged 44% to $9.7 billion at the end of the first quarter at Nike, while it soared 65% in its biggest market of North America.
Demand for Nike’s brands including JordanConverse
Rival Under ArmourTarget
Nike expects full-year gross margins to decline between 200 and 250 basis points, anticipating the greatest fall in the second quarter.
Meanwhile, the company, like other U.S. businesses with sprawling international operations, has grappled with a stronger dollar.
“Headwinds from foreign exchange shifted significantly in the last 90 days as the trend of U.S. dollar strengthening has accelerated,” Chief Financial Officer Matthew Friend said in an earnings call.