Nike Making Progress on Inventory But Storm Clouds Ahead

RetailDive has reported on some recent data from Nike.

Listen to this one.

Adidas posted a sales decline.
Nike posted sales growth.

But only because it had previously mismanaged inventory and had to clear out a bunch of over-manufacturing that was meant for D2C.

And of course their wholesale partners have too much inventory too, so growth will slow in both channels in the future.

Gross margins took a 330 basis point hit - not small.

Simon Siegel with the savage quote - kill shot.

“We continue to fear the growth in operated overhead is simply the structural cost of growing Direct, which is a key reason we believe DTC drives margin pressure, not benefit,” analysts led by Simeon Siegel said in emailed comments.

Look, it takes time to grow into the infrastructure investments required to scale DTC. And into this economy, they have the same problem Amazon does. Likely too much inventory and fixed costs and too little volume running through the channel.

I am mixed on Nike at the moment. Consumers are trading down.
Nike is not being categorized like other sporting goods at the moment.

They better just hope inflation goes down.