Ten consecutive declines! Since its listing, Nike's stock price has never been so miserable.

Wednesday's closing of the US stock market saw a sharp contrast between the soaring performance of NVIDIA and the bearish decline of sportswear giant Nike.

Overnight, Nike continued to fall as a result of Foot Locker, the largest footwear retailer in North America, reporting second-quarter results that fell far short of market expectations. Nike closed down 2.7%, marking its 10th consecutive trading day of decline, the longest since its listing in 1980.

Multiple pressures on Nike's performance as US consumers turn to the brand

Nike is expected to announce its earnings report in late September. As a world-leading sports giant, footwear accounts for a significant portion of Nike's revenue.

However, in recent months, the macroeconomic situation has changed consumer preferences. US consumers, especially millennial shoppers who are preparing to resume student loan payments (which were suspended during the pandemic and will resume in October), have reduced their spending on soft goods such as clothing and shoes and redirected their money towards services and experiences. Nike's footwear sales are facing significant challenges.

In an interview with CNBC, Rick Patel, a retail analyst at Raymond James, said:

US consumers are becoming increasingly selective. We hear some companies talk about wallet share shifting towards services and experiences, rather than discretionary spending, and their selectivity has increased.

As student loan payments resume in October, people are becoming more cautious about their demand in the second half of the year. We are talking about consumers who are already under pressure from inflation and will face even greater pressure in the fall.

Nike's two major wholesale partners, Foot Locker and Dick's Sporting Goods, have both released their earnings reports this week, with both retailers reporting lower-than-expected performance and declining revenue. Foot Locker has revised its performance guidance downward for the second time. The company attributed its poor performance to a slowdown in consumer spending, especially among its target customer base of middle- and low-income individuals.

CEO Mary Dillon stated:

The challenges we saw in terms of store traffic and conversion rates at the end of the first quarter continued into the second quarter, as our customers remained cautious with their discretionary funds.

However, although Dick's Sporting Goods also performed poorly and even reported losses, its footwear sales remained strong, which the company referred to as a "huge bright spot" in its earnings report.

Lack of innovation, intense competition, and weak performance for the industry leader

The US market is not the only headache for Nike.

In the Chinese market, which accounts for one-third of its sales, Nike is facing competition from local footwear brands such as ANTA, Li-Ning, and Xtep. Some analysts believe that compared to trendy new brands, Nike's products lack competitiveness. William Trade analyst Sam Poser stated in his May research report, "Nike does not have enough eye-catching new products, and its old products have become outdated."

Industry analyst and founder of ARCH-USA, Chris Burns, pointed out that Nike's products have lost their novelty.

At the same time, analysts from TD Cowen stated that the company's excessive distribution in the wholesale market is also "causing fatigue among lifestyle athletic shoe consumers" because these consumers already have enough Nike shoes at home.

In addition, the growth of China's social retail market in the second quarter was slow, and it is expected to take time for the Chinese economy to rebound significantly. This may have an impact on Nike's performance.

In the previous quarter, Nike's revenue in China increased by 16% to $1.81 billion, surpassing Wall Street's estimate of $1.68 billion. However, whether this growth can continue in the current quarter remains uncertain.

So far this year, Nike's stock price has fallen by over 13%, in stark contrast to the 14% increase in the market index.