Nike sinks 14% after the athletic-wear maker posts a 44% jump in quarterly inventory on supply-chain issues and warns on a margin squeeze

• Nike shares dropped 14% on Friday as the company logged a 44% rise in fiscal first-quarter inventory.
• Supply-chain issues led to a build-up in seasonal products and retailers began ordering early.

Nike shares tumbled to their lowest price in more than two years Friday after the company said inventories soared during its fiscal first quarter owning to supply-chain issues and that it's moving to rid itself of excess products.

Shares dropped as much as 13.5% to $82.50, the weakest price since April 2020 when the COVID-19 pandemic was in its first months of slamming into the global economy. The stock has dropped about 49% in 2022.

The stock plunged after the company late Thursday said inventories rose 44% to $9.7 billion compared with the year-ago period. Elevated in-transit inventories from ongoing supply chain volatility fueled the increase but Nike said the rise was partially offset by strong consumer demand.

The company behind the Nike, Jordan, and Converse brands said on its conference call that inventory grew 65% in North America versus the same period a year ago as regional disruptions caused late arrivals for products while retailers started ordering early for the holiday season.

''[We] effectively have a few seasons landing in the marketplace at the same time," Matthew Friend, Nike's chief financial officer, said according to a call transcript. "Because we have a portion of that inventory being seasonally out of relevance, we've decided to take that inventory and more aggressively liquidate it so that we can put the newest and best inventory in front of the consumer in the right locations. So that's where we're focused."

Nike said gross margin fell by 44.3% in the quarter ended August 31 in part by higher freight and logistics costs and US dollar strength.

The company also sees the US dollar pressuring full-year revenue by $4 billion and expects gross margin to decline by 200-250 basis points compared with the prior year.