Key growth markets weaken, inventory concerns intensify, Nike stock hits longest consecutive decline since IPO.

According to Dolphin Research APP, Nike (NKE.US) stock has been continuously declining recently, and on Tuesday it set a record for the longest consecutive decline. The reason for this is the market's growing concern about the company's weak recovery in the Chinese market and the continued increase in inventory, which is dragging down the profitability of the entire sportswear industry.

Data shows that Nike's stock fell 1.4% on Tuesday to $101.46, marking the ninth consecutive trading day of decline. This is the longest consecutive decline since the company's IPO in December 1980. Earlier, Nike's customer and retailer, Dick's Sporting Goods (DKS.US), announced lower-than-expected second-quarter results and lowered its profit forecast for the year, partly due to an increase in store theft incidents.

While Nike's stock price is weak, there are increasing signs that the company's business in its key growth market, China, is experiencing a weak rebound.

This decline has caused Nike's market value to evaporate nearly $13 billion, falling to about $155 billion. Even before the recent slump, Nike has failed to keep up with the overall market trend. Year-to-date, the stock has fallen by 13%, compared to a 29% increase in the S&P 500 Consumer Discretionary Index.

In the latest quarterly earnings report released at the end of June, Nike's earnings per share were slightly below analysts' expectations, indicating that the company is still trying to sell excess inventory through discounts. The company's outlook for this year also failed to win support from Wall Street.

Wedbush analyst Tom Nikic said that recent earnings reports from Under Armour (UAA.US) and Hanesbrands (HBI.US), the owner of the Champion brand, may have raised concerns among investors about the sustained high inventory levels of sportswear companies and the negative impact of promotional activities on their profit margins.

Nikic expects Foot Locker's (FL.US) earnings report, which will be released on Wednesday Eastern Time, to be an important signal for Nike. The analyst said that Foot Locker often provides details about Nike's brand performance. In 2022, this retailer purchased 65% of its athletic goods from Nike. Nike will release its next earnings report at the end of September.

Currently, Nikic still rates Nike as "outperforming the market," and most Wall Street analysts agree. Overall, there are 25 analysts with a "buy" rating, 11 with a "hold" rating, and 5 with a "sell" rating, with an average target price of $127. This means that the stock has about a 26% upside potential in the next year.