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Under Armour, Adidas, Puma and Dick’s Sporting Goods shares were all down on Friday after Nike’s inventory pileup and margins miss sparked anxiety across the industry.

The Swoosh’s leadership position in the industry could spell a larger problem as consumers continue to reevaluate their spending habits due to spiking inflation.

Indeed, the athletic giant reported on Thursday that it ended the first quarter of 2023 with inventories at 44%, or $9.7 billion, driven by “elevated in-transit inventories” from ongoing supply chain volatility, partially offset by strong consumer demand during the quarter.

Sam Poser, equity analyst at Williams Trading LLC, noted that the only path forward to correct this inventory misstep is to markdown goods, which can get very tricky. “This risk to adopting an aggressive markdown strategy, is you don’t want consumers to get used to only buying your product when it’s on sale,” Poser told FN. “Nike needs to make sure it has a lot of newness at the other end of these markdowns that will get consumers to purchase full-price product again.”

 

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