Nike Inc.
(NKE), a leading global sportswear and equipment supplier company, has witnessed an unrelenting decline in sales due to the continued economic downturn plaguing the retail industry.
The company reported a decrease in future orders for the past several quarters. Future orders measure customer orders scheduled to be delivered in the coming season. Nike anticipates its future orders to decline by over 5% when it reports its results in September.
The continued softness in the economy has led to a reduction in disposable income and a cut in consumer discretionary spending. Consequently, consumers are more attracted to national and local department stores and discount stores that offer products at fire-sale prices. Major retailers like Foot Locker Inc. (FL) and Hibbett Sports Inc. (HIBB) further anticipate plummeting sales in the coming quarters.
In order to realign its inventory to sales trends, Nike has recalled some of its shoes back from the retailers in exchange of items that are moving fast off the shelves. Although the move offers a short-term relief, it could hurt the brand image of the company in the long-run.
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