Athletic giant Nike gave investors a sign of the times: on the final day of Q3 2022, it dropped an earnings report with all the ingredients of these trying times…

The company’s shares tumbled over 12% after reporting earnings last week. Nike reported $12.7 billion in revenue, an increase of 4% YoY. However, its $1.5 billion in earnings was down 22%. Analysts were braced for the decline, but it did little to pad the stock’s movement today — Nike was down more than 10%.

There’s plenty of things that could be blamed for the company’s lackluster performance, but what can be said of Nike’s performance can likely be generalized to every other multinational. Nike continued to struggle with some of COVID’s many ills: shipping costs and supply chain made their presence known. However, now that the economy is facing the prospect of decline, the company’s swelling inventory is more liability than benefit.

The company’s inventories expanded by 44%, which means that the company had almost $10 billion of goods on its books — that’s a whole lot of shoes, athletic shirts, and shorts. And getting it off the books will cost Nike some money. The company’s finance chief indicated that discounts and more thoughtful ordering will prevent this problem from becoming pervasive.

There are any number of more pervasive problems

The strength of the Dollar has been impacting the revenue of large international firms like Nike. It observes that sales will only grow by a few percentage points when the year comes to a close. That’s because selling products in Europe, Asia, or Africa requires doing business in other currencies — and while large firms like Nike sit in Euros, Pounds, Rupee, or any number of currencies, those currencies will fluctuate against the Dollar.

You can think of Nike’s problems as a turducken of problems which are also widely mirrored in the operations of other companies: there’s a supply chain-shipping-inventory-cost-management-currency-geopolitical juggling effort awaiting firms as they report earnings this season.

And naturally, firms are bound to drop a ball or two in this convoluted juggling match. However, what Nike unfortunately cannot answer is is how many balls other large corporates will drop when they start to report over the next few weeks.

Thankfully, analysts produce their own answers. Today, on the last day of the month and quarter, FactSet research reported that earnings growth for the quarter is expected to be just shy of 3%. For perspective, that’s over 3x lower than what analysts expected from companies on the last day of June. Since then, dozens of companies have issued negative guidance; investors and operators alike got off easy in Q2 2022, but concerns about the state of the markets and economy were just punted to Q3.

Now, we’ll be facing those concerns head on. Over the next few weeks, we’ll be covering earnings from some of America’s most valuable companies to discern whether or not there’s anything really to be afraid of in the market. However, with the tech-heavy Nasdaq-100 down more than a third on the year now, investors are speaking with their money and checking out of the market entirely.

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