Another Major Brand Is Offering Discounts On Its Excess Inventory – Boston News, Weather, Sports

(CNN) — Add Nike to the list of brands and stores that offer discounts on additional merchandise to clear it from shelves.

Nike said Thursday its inventory levels rose 65% in North America, its largest market, and 44% from the previous quarter a year ago.

After navigating limited supply in 2021, Nike is now carrying a lot more products, especially when it comes to clothing.

“We effectively have a few seasons landing in the market at the same time,” Nike CEO John Donahoe said Thursday on a call with analysts.

Donahoe pointed out that while Nike’s factories in Vietnam and Indonesia had to close following the outbreak of COVID-19, goods arrived late in this year’s spring, summer and fall seasons. Then orders for Nike’s upcoming holiday season arrived earlier than planned. Meanwhile, the brand still has trade orders in transit.

He added that Nike will offer discounts for moving items, and those promotions will weigh on its profitability for the coming quarters. Nike shares lost 11% during afternoon trading on Friday.

Investors are also concerned about the list of other athletic companies, with Under Armour, Adidas, Dick’s and other athletic companies falling sharply on Nike news on Friday as well.

To take off items that are now out of season and have moved to the appropriate holiday selection, Nike will be moving more clothing to its factory stores, promoting online and selling more to discount stores like TJ Maxx. Nike has been holding back from selling products to other retailers in recent years. Shipping your goods to a discount chain is a last resort.

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“We are taking decisive action to clean up excess inventory, focusing primarily on specific pockets of products arriving seasonally late in apparel,” Donahoe said.

Target, Walmart and others said in recent weeks that they expect the upcoming shopping season to be packed with discounts. This year, retailers seriously miscalculated what was in demand and sat on too much casual clothing, home goods, electronics and other non-essentials.

But Nike’s level of excess inventory was not expected.

“The surprise of the quarter was the magnitude of the promotional activity required to move through additional apparel,” Lorraine Hutchinson, an analyst at Bank of America, said in a note to clients on Friday.

Despite the inventory glut, Nike had some positive news to share: Demand remained strong, especially for sneakers, even in the face of high inflation. Overall, Nike’s sales grew 4% last quarter compared to the same period a year ago.

“We currently see strong consumer demand in North America,” Donahoe said. “There is no sign of any softening.”

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