Nike shares plummeted to their lowest price in more than two years on Friday after the company said inventories soared during its fiscal first quarter and that it was moving to rid itself of excess products.
The shares dropped as much as 11.5% in premarket trade to $84.34, the lowest price since the first months of the COVID-19 epidemic.
The stock dropped after the company said inventories rose to nearly $10 billion, up from $7 billion a year ago. Nike said the rise was partly offset by strong consumer demand.
The company behind the Nike, Jordan and Converse brands said on its conference call that inventory grew in North America as regional disruptions caused late arrivals for products while retailers started ordering early for the holiday season
Matthew Friend, Nike's chief financial officer, said on the call that they had a few seasons landing at the same time. We decided to take that inventory and liquidate it so that we can put the newest and best inventory in front of the consumer in the right places. That is where we are focused.
The gross margin fell in the quarter because of higher freight and logistics costs and the US dollar's strength.
The company expects full-year revenue to be $4 billion less due to the US dollar.
All Rights Reserved © 2024
