Destocking in sight 👟
28 June 2022
Nike released last night its results for the past quarter. The inventory level reached a record level: $8.4 billion. That's more than 65 days of sales. 15 days more than in previous years.
After several months of full consumption at high prices, and in parallel with inflation, the consumer will return to his pre-pandemic reflexes: look at the bill before paying and wait for the sales to buy.
As a result, Nike's storage warehouses will have a hard time clearing out.
Nike's solution:
« Transform the business model with new capabilities to evolve at the speed of the consumer ". Translation: implement inventory optimization software.
The real solution that will prevail:
Destocking, through promotions, offers and sales.
A negative point for Nike's margins, which will be "under pressure" next quarter according to CFO Matthew Friend.
Nike is trading at 28x its profit, with a strong presence in a most uncertain Chinese market.
Have a great week,
Pierre
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