High inventory and strong U.S. dollar hamper Nike's profits

Nike saw shares fall 9 percent after reporting its inventory grew 44 percent over last year in the first quarter of 2022. The strong dollar is hampering foreign exchanges and denting profits, including at Nike. When the dollar is high it makes the price of U.S. goods more expensive abroad.

Nike must also reduce its high inventory, of which inventory in transit rose 85 percent. Markdowns will be the logical answer to shifting stock, but this too will hit profit margins. Nike is expected to mark down apparel in a bid to normalise stock levels and will work with wholesale partners on reducing inventory.

In a statement Nike CEO Matthew Friend said: “We are taking decisive action to clear excess inventory,” also explaining late arrival of merchandise increased inventory levels. In Q2 Nike expects the levels to normalise and revenue to increase by 10 percent.