How Nike lost its cool. Shares trade at a 12-year low
Shares of Nike are down another 4% today, falling to a fresh 12-year low.
The decline comes after Dick's Sporting Goods fretted about inventory over-allotments in its quarterly earnings, and in footwear specifically. The market is reading that as the company saying "we stocked a lot of Nike shoes and no one bought them."
At the end of the day, the shares are falling for the simple reason that people aren't buying as many Nike sneakers as they used to. The trend started in China where local brands began making their own shoes that were equally as good and at better price points. The US trade war there suddenly made consumers want to 'Buy China' and it snowballed.
From there, China began exporting its domestic brands and they have taken market share in many markets. At the same time, the US started to hit the shoemaker with tariffs and that compressed the multiple on business risk.
Underneath that is a simple erosion of its brand. That's happened at the same time as NBA ratings have fallen as there is an intractable link between the company and the sport. The game was taken over by lackadaisical defense, 3-point shooting, load management and a lack of star power. Nike has been coasting off of Michael Jordan for decades and chasing the 'cool' market. At the same time, it was slowly undercut by brands focusing on running, walking, workwear and other sports. That hollowing out left it vulnerable and now it's in something of a cool-ness death spiral alongside its share price.
Then you take today's news and what will Dick's response be to poor sales? They will put fewer Nike shoes on the shelves and they will be less visible.
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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