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Nike’s Fourth-Quarter Results Amid Weaker Demand


As the athletic-gear industry continues to face weaker overall consumer demand, Nike Inc. is set to release its fourth-quarter results on Thursday. Despite double-digit sales gains for some of its basketball shoes named after NBA icons, like LeBron James, Luka Doncic, and Giannis Antetokounmpo, customers are spending less on new shoes due to budget constraints.

In March, Nike executives reported a “promotional” demand environment where sneaker and clothing sellers were slashing prices to attract customers. Looking ahead to the report, industry analysts wonder if the stalling demand has forced management to rethink its broader sales strategy.

Recent years have seen Nike shift away from relying on shoe retailers and instead focus on sales through its own stores and online channels. However, the company has sought to revive partnerships with Macy’s and Designer Brands Inc.’s DSW shoe-store chain in recent months after ending partnerships with both retailers over the past two years.

As the sneaker market becomes more competitive, both large retailers and niche brands are innovating by targeting specific audiences, exploring collaborations with other brands, and launching social campaigns to amplify their products. It remains to be seen how Nike will adapt to meet these challenges in the future. Nike’s Return to Traditional Retail Raises Questions

Nike’s recent return to traditional retail has raised questions about their sales strategy and whether they are looking to clear out products that have been difficult to sell. Analysts are wondering if this is a shift for the company as a whole.

According to Quo Vadis analyst John Zolidis, “[Nike’s] overestimated the dollars it could recapture from closed wholesale accounts and now has too much inventory it needs to clear.” This would explain why they have reopened Macy’s and DSW, two retailers that previously fell out of favor with the company.

What to Expect

Earnings: Analysts polled by FactSet predict that Nike will earn 68 cents a share, down from 90 cents in the same quarter a year ago. Contributors to Estimize expect earnings per share of 75 cents.

Revenue: Analysts polled by FactSet expect $12.58 billion in sales for Nike. Forecasts from Estimize call for sales of $12.72 billion. #Nike’s Stock Price

Nike’s stock has only experienced a 1.3% increase over the past year. However, shares have rebounded and were up 2% on Monday. Despite this, company executives have warned of further price-cutting due to weaker demand from rivals, which led to a decline in shares in September.

While Nike stated that demand for full-price products remained solid, sneaker chain Foot Locker Inc. recently cut its outlook. Some analysts have noted that lots of Vans shoes are being sold at a discount, as the brand competes with casual wear from other companies like Adidas.

The return of Nike products to Macy’s and DSW has caused concern among some analysts, who question whether it marks a reversal in the company’s shift from wholesale to direct-to-consumer sales. However, not everyone believes this is a sign of deeper problems. In a research note on Wednesday, BofA analyst Lorraine Hutchinson stated that they do not believe the company’s strategy is broken and expect an explanation of these moves on the upcoming conference call.

Investors are also worried about sales abroad, particularly in China where growth has stalled due to the pandemic. Companies in China have reported mixed trends as consumers become more value-oriented and face higher job uncertainty.

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