All throughout 2022, we’ve been riddled with inflation not only from our everyday essentials like gas, eggs, and other necessities but in the “luxury” category as well - sneakers included. This coupled with reports of factories overseas receiving word to slow down production starting in the Summer 2023 season shows that the footwear industry is starting to feel these effects as consumers are spending less on non-essentials. To add another layer to this, those in the sneaker game have noticed that sneakers we all thought were sold out eons ago would randomly appear in Nike outlets or receive a random drop online through nike.com, pointing to inventory building up in the warehouses. Well, these suspicions have been confirmed in Nike’s 2023 Q2 fiscal report and the numbers are daunting.
Compared with 2022’s Q2 fiscal results, revenue has increased by 17% to $13.3 billion and has also seen a 16% bump in DTC sales that now totals nearly half of the company's revenue for this quarter at $5.4 billion. This is where the report begins to showcase why Nike is currently running through its reserve cash as its gross margin decreased by 3% thanks to a number of factors including currency exchange rates, higher logistics and shipping costs, and increased product input costs. Overhead for the company also increased by 10% and cash on hand was down a whopping 40% compared to the year prior, sitting at $6.5 billion.
Arguably the most noteworthy detail in this report is the amount of inventory piling up at Nike. Currently, the total value of inventory sitting in possession of The Swoosh is $9.3 billion, up 43% compared to the prior year period. Nike’s explanation? “An increase in units from lapping prior year supply chain disruptions, as well as higher input costs.”
Couple this with the countless releases that are sitting (like today's drop of the Air Jordan 1 Retro High OG “Gorge Green”) and this issue doesn’t seem to be getting any better, however, CEO John Donahue was quoted as saying “We believe the inventory peak is behind us.” Hopefully, in the future, The Swoosh can fix the glaring inventory issues and employ strategies that will help rev up their cash flow once again. Keep it locked to our Twitter and the Sole Retriever mobile app to stay updated on the latest news, releases, raffles, and more in the sneaker and streetwear world.
Images via Nike
Sneakerhead from South Florida who turned his passion into a career. Concerts, music, trying new restaurants, and catching the latest movies are some of the things I enjoy when not writing for Sole Retriever. Email: nick@soleretriever.com
