HomeIndustriesNike Shares Surge Following Inventory Cut

Nike Shares Surge Following Inventory Cut

Nike shares skyrocketed by 10% during premarket trading on Friday after the sports apparel company slashed its inventory ahead of the busy holiday shopping season. The company also raised its forecast for its second-quarter gross margin.

The sportswear giant has faced excessive inventory levels this year on the back of lower US demand. This issue largely stems from supply-chain hiccups as well as lower discretionary spending from consumers. Nike shares have plummeted by around 23% so far this year.

The company’s inventory levels stood at $8.7 billion during the first quarter, down from $9.66 billion a year earlier. Nike is adding a 100 basis point boost to its current-quarter gross margin forecast while keeping its annual outlook constant.

Drake MacFarlane, research analyst at M Science, has praised Nike’s ability to shrink its inventory, commenting that it “is very encouraging, considering the overall challenging promotional environment for the footwear industry.”

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