Topsports profit warning negative data point for Nike, says Citi

Citi analyst Paul Lejuez says Topsports, a key wholesale partner to Nike in China, issued a profit warning for its six-month period ending August 31. The company called out a weakening consumer, broadening of promotions and elevated inventory levels, which are negatively impacting gross margin, the analyst tells investors in a research note. The firm views the news as an incremental negative data point for Nike in China. Citi is now “incrementally more concerned” on the implications of higher promotions and elevated inventory in China on Nike’s fiscal Q1 gross margin. It keeps a Buy rating on the shares.