Nike posted a record streak of losses as concern over China’s sluggish consumer recovery builds and elevated merchandise stockpiles continue to weigh on profitability across the activewear industry.
The stock slid 1.4 per cent to $101.46 on Tuesday, falling for a ninth straight session in its longest losing streak since the company’s initial public offering in December 1980.
The latest drop came after retailer and Nike customer Dick’s Sporting Goods reported disappointing fiscal second-quarter results and cut its profit outlook for the year, due in part to more theft at its stores.
Nike’s weakness coincides with increasing signs of a soft consumer rebound in China, which is a key growth market for the sports-gear giant.
China’s retail sales growth decelerated to 2.5 per cent in July, worse than the median forecast of 4 per cent.
“Investors are waking up to the fact that China’s growth is going to be slower,” said Matt Maley, chief market strategist at Miller Tabak + Co.
They’re also realising that China is not going to do as much as it has in the past to boost growth, he said.
The rout wiped out nearly $13 billion of Nike’s market value, which stands at $155 billion.
Even before the recent slump, Nike had failed to keep pace with the advance in the broader market. It’s now down 13 per cent this year, while the S&P 500 Consumer Discretionary Index has surged 29 per cent.
In its most recent quarterly results in late June, Nike reported earnings per share that fell just short of analysts’ expectations, indicating that the company is still working to sell off excess inventory with discounts. Its outlook for the current year also failed to win over Wall Street.
Wedbush analyst Tom Nikic said recent earnings reports from Under Armour and Champion owner Hanesbrands have likely stoked investor concern over persistently high inventory levels at athleticwear companies, and the negative impact promotions will have on their margins.
Nike is due to report its next results in late September.
Nikic has an outperform rating on Nike shares, as do the majority of analysts tracked by Bloomberg.
Nike has 25 buy ratings, 11 holds and five sells, and an average analyst price target of $127, which implies about 26 per cent return potential over the next year.
UAE currency: the story behind the money in your pockets
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The years Ramadan fell in May
The specs
Engine: 3.9-litre twin-turbo V8
Power: 620hp from 5,750-7,500rpm
Torque: 760Nm from 3,000-5,750rpm
Transmission: Eight-speed dual-clutch auto
On sale: Now
Price: From Dh1.05 million ($286,000)
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
Various Artists
Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Call of Duty: Black Ops 6
Developer: Treyarch, Raven Software
Publisher: Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5
