“Demand for sportswear is slowing down”

Is Nike ending up with larger than expected inventories? Analysts fear tha a slowdown in demand for sportswear means that the athletic footwear giant will miss out on profits.

Less optimistic

Back in March, Nike’s Chief Financial Officer Matthew Friend told reporters that the sportswear manufacturer was seeing its stock fall “faster than expected”. After supply chain failures and fluctuating demand in recent years, inventory costs have risen by 16 %, but this year stock levels are expected to recover. In fact, the problems already seemed to have been overcome.

Wall Street analysts now fear that his comments may have been somewhat premature. Morgan Stanley believes that in North America and Europe, demand for sportswear is slowing down, leading to an influx of excess stock across the sector. Companies are now trying to get rid of these stocks through promotions, but this is obviously weighing on margins, profits and even sales. Perhaps also at Nike.

In the wholesale sector in particular, stockpiling can be a problem. Sports footwear retailer Foot Locker, for example, has cut its sales forecasts for the year as a whole. In the United States, sales of Nike sneakers have been slower since March, partly due to lower-than-expected tax refunds and a less favourable consumer climate, UBS also confirms. Fortunately, other continents could compensate for North America’s problems.