---
title: "Nike suffers record losing streak on China, inventory woes"
description: "Nike Inc. posted a record streak of losses as concern over China’s sluggish consumer recovery builds and elevated merchandise stockpiles continue to weigh on profitability across the activewear industry."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2023-08-23-nike-suffers-record-losing-streak-on-china-inventory-woes/"
published: "2023-08-23T06:03:22"
lang: "en-ZA"
word_count: 413
---

# Nike suffers record losing streak on China, inventory woes

> Nike Inc. posted a record streak of losses as concern over China’s sluggish consumer recovery builds and elevated merchandise stockpiles continue to weigh on profitability across the activewear industry.

By Bloomberg · Published 23 August 2023, 08:03 SAST

## Key points
- Nike shares have slid to their longest losing streak since 1980, as soft consumer rebound in China and disappointing results from Dick's Sporting Goods cast doubt on the sports-gear giant's future.
- Nike's stock slid 1.4% to $101.46 in its longest losing streak since its IPO in 1980.
- Signs of a soft consumer rebound in China, a key growth market for Nike, are increasing.
- The rout has wiped out nearly $13-billion of Nike’s market value, and it is down 13% this year.
- Analysts have an average price target of $127 on the stock, implying 26% return potential over the next year.

## Content

The stock slid 1.4% to $101.46 on Tuesday, falling for a ninth straight session in its longest losing streak since the company’s initial public offering in December 1980. The latest drop came after retailer and Nike customer Dick’s Sporting Goods Inc. reported disappointing fiscal second-quarter results and [cut](https://www.bloomberg.com/news/articles/2023-08-22/dick-s-tumbles-as-results-show-slowing-sports-apparel-spending) its profit outlook for the year, due in part to more theft at its stores.

Nike’s weakness coincides with increasing signs of a soft consumer rebound in China, which is a key growth market for the sports-gear giant. China’s retail sales growth [decelerated](https://www.bloomberg.com/news/articles/2023-08-15/china-central-bank-unexpectedly-cuts-key-rates-as-economy-slumps) to 2.5% in July, worse than the median forecast of 4%.

Read more: [Gloomy Signs Pile Up for China Sportswear Stocks as Anta Reports](https://www.bloomberg.com/news/articles/2023-08-22/gloomy-signs-before-anta-2020-hk-results-dampen-china-sportswear-outlook)

“Investors are waking up to the fact that China’s growth is going to be slower,” said Matt Maley, chief market strategist at Miller Tabak + Co. They’re also realising that China is not going to do as much as it has in the past to boost growth, he said.

Read more: [Run It Cold: Why Xi Jinping Is Letting China’s Economy Flail](https://www.bloomberg.com/news/features/2023-08-20/xi-jinping-is-running-china-s-economy-cold-on-purpose)

The rout has wiped out nearly $13-billion of Nike’s market value, which currently stands at $155-billion. Even before the recent slump, Nike had failed to keep pace with the advance in the broader market. It’s now down 13% this year, while the S&P 500 Consumer Discretionary Index has surged 29%.

In its most recent quarterly results in late June, Nike [reported](https://www.bloomberg.com/news/articles/2023-06-29/nike-shows-sales-strength-profit-falls-just-short-of-estimates) earnings per share that fell just short of analysts’ expectations, signalling that the company is still working to sell off excess inventory with discounts. Its outlook for the current year also failed to win over Wall Street.

Wedbush analyst Tom Nikic said recent earnings reports from Under Armour Inc. and Champion owner Hanesbrands Inc. have likely stoked investor concern over persistently high inventory levels at athleticwear companies, and the negative impact promotions will have on their margins.

He anticipates Foot Locker Inc.’s earnings report on Wednesday will be an important signal for Nike, which is due to report its next results in late September. Foot Locker often provides details around the performance of its brands, he said. In 2022, the retailer purchased 65% of its athletic merchandise from Nike.

Nikic has an outperform rating on Nike shares, as do the majority of analysts tracked by Bloomberg. Nike has 25 buy ratings, 11 holds and five sells, and an average analyst price target of $127, which implies about 26% return potential over the next year. **DM**