- Thursday’s inventory increase by 44% was announced by the sportswear company.
- The company’s three last seasons of product arrived late, and holiday merchandise arrived earlier.
- Nike plans to reduce older merchandise and eliminate off-season products in time for the holidays.
Nike products will soon go on sale across the country.
The sportswear manufacturer reported Thursday a 44% increase on inventory. They also said they plan to increase discounting to get rid some of their $9.7billion in apparel and footwear prior to the holidays.
Nike isn’t the only company to deal with these issues Stock levels are high. Target, Walmart, and Kohl’s are just a few of the large retailers that work through this site. Backrooms that flood.
On Thursday’s earnings conference, analysts were drawn to the Nike inventory surge. But executives also reiterated their belief in the core business plan of the company. Dedicated to direct, digital sales.
Nike’s quarterly revenue rose 10% to $12.7 billion. This is higher than Wall Street’s expectations of $12.28 trillion. The company reported quarterly earnings of 93 cents per share, higher than analysts expected.
The direct and digital sales, which do not include currency charges, rose 14% & 23%, respectively.
Nike executives spoke with analysts to say that inventory reached a peak in the quarter because of several factors, including the late product deliveries for the three previous seasons due to the pandemic. Nike ordered and received holiday merchandise earlier than usual. Furthermore, executives stated that stock levels in the past year were lower than usual due to factory closings.
Nike has begun to discount products, with a focus on off-season apparel. It plans to get rid of older merchandise before the holidays.
Matt Friend, Chief Financial Officer, stated that while we are focusing on getting rid of the late-season apparel inventory primarily in North America we also have some in Europe and Asia.
Nike shares fell 9% in after-hours trading on Thursday, just a few hours after the earnings report.
Analysts predicted that the company will face a shortage of merchandise, which could lead to a decrease in its margins.
John Donahoe, CEO of Nike, stated that inventory issues aside, the company’s core-business plan is still working.
He said, “I’m proud to our results this quarter as brand momentum and culture of innovation delivered yet another quarter with strong revenue growth.” “Our brand strength continues giving us confidence in sustaining the top line momentum.”
