The year 2023 has posed significant hurdles for Nike’s stock (NYSE: NKE) as it navigates through a complex landscape of challenges. Swollen inventories, a sluggish consumer recovery in China, and lackluster earnings results across the broader retail sector have converged to create a tough start to the year for the athletic footwear and apparel giant.
These challenges have taken Nike’s shares for a dive. Notably, the apparel’s stock fell again on August 22 for the ninth consecutive trading day, marking the longest losing streak in the company’s history
Nike stock price analysis
At the time of writing on August 23, Nike’s shares were standing at $101.46 after edging 1.36% lower on Tuesday.
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This is the lowest closing price for NKE in 2023 and the lowest point since November 2022.
Over the past week, the company’s shares declined by more than 4.3% and over 6% on the month.
Year-to-date, NKE plummeted nearly 15%, broadly underperforming the S&P 500 equity index, which gained around 14.7% during this period.
Why is NKE dropping?
Nike’s record-breaking streak of losses comes amid tepid consumer recovery in China, the company’s second-largest market, as well as mounting merchandise stockpiles, which continue to affect its profitability.
The latest drop, however, was triggered by a disappointing Q2 earnings report and guidance by Dick’s Sporting Goods, a sportswear retailer, and Nike’s key customer.
From a broader perspective, Nike’s stock market woes coincide with growing signs of a soft consumer rebound in China, where year-over-year retail sales growth fell to 2.5% in July, widely below the consensus estimates of 4%.
“Investors are waking up to the fact that China’s growth is going to be slower,” said Matt Maley, chief market strategist at investment advisor Miller Tabak + Co.
Additionally, NKE’s decline has also been in part driven by the company’s worse-than-expected earnings report in June. The company’s earnings per share (EPS) were slightly below analysts’ estimates, suggesting that the apparel giant is still struggling to sell excess inventory.
Nike’s outlook for the current fiscal year also missed Wall Street’s expectations.
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