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Wednesday, July 5, 2017

BUXONE Nike's core business is facing a 'disturbing' decline


Nike may have beaten Wall Street's estimates when it reported earnings last week, but its troubles are far from over.

Though growth in China and emerging markets boosted worldwide revenue, the core US business still lagged behind, remaining flat year-over-year.

This doesn't bode well for the world's largest sportswear company. The US is still Nike's biggest market, and it is also where it faces the least amount of competition from rivals like Adidas. Some industry experts are expressing concern.

"The continued decline of Nike’s U.S. business is disturbing," Matt Powell, a sports industry analyst at NPD Group, told Benzinga.

Not only were sales overall flat, but futures — a key metric that measures retailer demand for product — were reported down by 10%.

As Nike shifts from wholesale to sell more product directly to consumers, this number is becoming less important. But it still signifies that some stores are finding it difficult to sell Nike's offerings.

"To my eye, Nike is on sale now more than ever,” Powell said. “Our industry was built on aspiration and inspiration, not on price.”

Nike is in the midst of a restructuring plan after seeing revenue slip of late. The company is laying off roughly 1,400 employees as part of its "Consumer Direct Offense" to try to revive sagging sales.
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Item Reviewed: Nike's core business is facing a 'disturbing' decline Rating: 5 Reviewed By: BUXONE