Nike shares dropped another 4% today, hitting a fresh 12-year low, after Dick's Sporting Goods flagged footwear inventory over-allotments in its quarterly results. The decline reflects a longer slide in sneaker demand that started in China and has since spread into brand erosion tied to the NBA's falling popularity.
Nike shares fell 4% today, sliding to their lowest level in 12 years. The drop follows Dick's Sporting Goods flagging inventory over-allotments in footwear during its quarterly earnings, which the market read as a sign that stores stocked more Nike shoes than shoppers bought.
At its core, the decline traces back to fewer people buying Nike sneakers. That shift began in China, where local brands started making shoes of similar quality at better prices. The US trade war with China then pushed consumers there to favor domestic brands, and the trend snowballed.
China's brands subsequently expanded into other markets and took share there too, while US tariffs on the shoemaker weighed on how investors price its business risk.
Underneath the sales slump sits a broader erosion of the brand, one that has moved in step with falling NBA ratings given the close link between Nike and the sport. The league's style of play — heavy on three-point shooting and load management — has coincided with Nike leaning on its decades-old Michael Jordan association while chasing the "cool" market, even as rival brands built strength in running, walking and workwear. That left Nike exposed just as its share price entered its own decline.
Dick's response to the weak sales will be to put fewer Nike shoes on its shelves, making the brand less visible where shoppers browse.
Source: Investinglive
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