Analysts Forecasted Nike’s Slump Based on Declining Orders from Key Taiwanese Supplier

Nike Inc.’s recent decline in sales and profits was anticipated by analysts who had been tracking declining orders from its major Taiwanese shoe supplier..

In the fiscal year ended May 31, 2023, Nike’s revenue fell 1% to $46.7 billion, while its net income dropped 32% to $4.3 billion. The company cited several factors for the decline, including macroeconomic headwinds, supply chain disruptions, and a shift in consumer spending..

However, analysts also pointed to a significant decline in orders from Pou Chen Corporation, Nike’s largest shoe supplier in Taiwan. Pou Chen is the world’s largest athletic footwear manufacturer, and its production facilities account for more than 25% of Nike’s total footwear output..

In the past year, Pou Chen’s orders from Nike have declined by more than 20%, according to analysts at Susquehanna Financial Group. This decline is due in part to Nike’s decision to diversify its supply chain and shift production to other countries, such as Vietnam and Indonesia..

The decline in orders from Pou Chen is also a reflection of Nike’s broader challenges in the Chinese market. Pou Chen has a significant presence in China, and the company has been impacted by the country’s economic slowdown and COVID-19 lockdowns..

Analysts say that Nike’s slump is a sign of the challenges facing the entire athletic footwear industry. The industry is facing increasing competition from both traditional and new brands, and consumers are becoming more price-conscious..

Nike is also facing challenges from the rise of e-commerce, which is making it easier for consumers to buy shoes from other brands. In the past year, Nike’s online sales have grown by only 6%, while its sales at physical retail stores have declined by 4%..

Analysts say that Nike needs to take steps to address its challenges, including investing in new products, improving its supply chain, and expanding its presence in e-commerce..

Nike’s stock price has fallen by more than 40% in the past year, reflecting the company’s challenges. However, analysts say that Nike is still a strong brand with a loyal customer base. If the company can address its challenges, it is well-positioned to return to growth in the future..

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