**Nike’s* losing streak could reach a record as the sportswear giant grapples with inventory issues and concerns over its performance in China, according to analysts.
The US sportswear behemoth is expected to report third-quarter results on March 23, and analysts have cut their estimates for revenue and profit amid ongoing supply chain disruptions and rising costs.
According to Consensus Metrix, analysts now expect Nike to report revenue of $13 billion for the third quarter, down from the $13.2 billion predicted in January. Earnings per share estimates have also been trimmed from $0.86 to $0.83.
**China headwinds**
Nike has been facing headwinds in China, its largest market outside the United States. The company has been hit by a combination of factors, including rising COVID-19 cases, ongoing geopolitical tensions, and a wider crackdown on the country’s tech sector.
In the second quarter, Nike’s revenue in China fell by 19% year-over-year, leading to a wider-than-expected decline in overall sales. Analysts believe that the situation may not have improved much in the third quarter, given the recent resurgence of COVID-19 cases in China.
**Inventory woes**
Nike is also grappling with inventory issues. The company has been building up its inventory levels over the past year to meet strong demand, but this has led to a situation where it now has too much of the wrong product in the wrong place.
As a result, Nike is expected to announce plans to mark down more products in the third quarter, which will pressure its margins. The company has already announced plans to take a $125 million charge related to excess inventory in the second quarter.
**Outlook**
Analysts are cautious about Nike’s outlook for the rest of the year. While the company is expected to benefit from the easing of COVID-19 restrictions in some parts of the world, it still faces significant challenges in China and with its inventory levels.
Consensus Metrix estimates that Nike’s revenue will grow by 6.6% in fiscal 2023, down from the 9.2% growth that was predicted in January. Earnings per share are now expected to grow by 11.7%, down from the 15.7% growth that was previously expected.
**Investor reaction**
Nike’s stock has fallen by around 30% over the past year, as investors fret about the company’s challenges in China and its inventory issues. The stock is currently trading at around $130, well below its 52-week high of $177.55.
Analysts believe that Nike’s stock could remain under pressure in the near term, as the company works to address its challenges. However, they also believe that Nike is a long-term winner and that the current challenges are unlikely to derail its growth trajectory..
