**Nike’s Slump Was Foretold by Its Key Taiwan Shoe Supplier**.
Nike, the athletic footwear and apparel giant, has been facing challenges in recent quarters, with slowing sales and declining profits. Now, a key supplier of Nike shoes in Taiwan has revealed that it saw the signs of the company’s struggles well before they became evident to the wider market..
**Declining Orders and Inventory Buildup**.
Pou Chen Corporation, Nike’s largest contract manufacturer and supplier of athletic shoes, reported a sharp decline in orders from the sportswear giant in the second half of 2022. This decline was particularly pronounced in the fourth quarter, with Pou Chen’s Nike-related orders falling by 20%..
The drop in orders led to a significant buildup of inventory at Pou Chen’s factories. By the end of 2022, the company had accumulated a large supply of unsold Nike shoes, which weighed on its financial performance..
**Factors Behind the Slump**.
Pou Chen CEO Tsai Ming-kai attributed the decline in orders to several factors, including:.
* **Economic slowdown:** The global economic slowdown in the second half of 2022 led to reduced consumer spending on non-essential items like shoes..
* **Overstocking:** Retailers had overstocked on Nike shoes in anticipation of strong holiday sales, which did not materialize..
* **Competition:** Nike faces increased competition from other athletic footwear brands, such as Adidas and New Balance..
* **Supply chain disruptions:** The COVID-19 pandemic and the ongoing war in Ukraine have disrupted Nike’s supply chain, leading to production delays and increased costs..
**Missed Warnings**.
Tsai Ming-kai believes that Nike may have missed the early warning signs of its struggles. He said that Pou Chen had been alerting Nike to the potential for a slowdown in orders and the need to adjust production levels..
