Blog Post #10 – Why H&M, Nike, and Adidas Stock Fell Today

Large American retailers H&M(-1.84%), Nike(-3.44%), and Adidas(-6.10%) stock fell Thursday condemning China’s alleged human rights violations coming after western sections have been placed.

Why is Xinjiang relevant here?

Officially named, Xinjiang Uygur Autonomous Region (XUAR), it is an autonomous region of China. Autonomous means the region has its own local government with region-specific legislative rights.

From Nike’s statement on Xinjian, Nike does not directly source material from XUAR, but these allegations violate their Code of Conduct and Code Leadership Standards which “have requirements prohibiting any type of prison, forced, bonded or indentured labour, including detailed provisions for freedom of movement and prohibitions on discrimination based on ethnic background or religion.

H&M as well does source directly from Xinjian but does have relations with Huafu Fashion, which does have operations in XAUR. – Financial Times

Celebrity Reactions

Not only are the company stock prices affected, but branding deals have also been shaken. Here just some names you may know if you are familiar with K-pop.

Auditing

Now what about the evidence, we need the evidence! Audits have occurred with Xinjiang but their progress has halted since September 2020 due to it being too difficult to determine if such allegations exist.

It is unclear whether Nike, Adidas, or H&M plan to continue to push their own audits.

My Opinion

I do want to see more progress from these audits and evidence before I can conclude with any opinion on this matter. I will continue to watch this story as it unfolds and I am glad to see companies willing to stick to their code of conduct and requirements.

As for stocks, I’ll be researching how this impacts Nike and related companies’ businesses and whether this is a “buy the dip” opportunity, as I do not currently own any of these companies in my portfolio.

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