Nike, Muji, Calvin Klein parents groups lead stock losses on Chinese boycott fears

On Thursday, Nike (NKE) fell hardest among the Dow industrials, down more than 5 percent on news of a possible boycott in China. In a similar fashion, the operator of Japanese brand Muji saw its shares drop more than 7 percent in early trade Friday.

Nike shares dived 5 percent on the Dow Jones Wednesday and ended the daily trading session contributing to a 3.2 percent loss so far this week. Analysts covering the stock point out that such a dip pushed shares below their 50-day moving average.

Nike and Adidas came under attack on Chinese social media on Thursday over past comments the fashion brands have made about labour conditions in Xinjiang. On Monday the U.S., the European Union, Canada, and the UK placed sanctions on China for “repressive practices against Uyghur Muslims and members of other ethnic and religious minority groups in Xinjiang.”

Soon after the sanctions were announced, old statements on human rights violations in Xinjiang from retailers including H&M and Nike surfaced on the Chinese social media platform Weibo. Those went viral rather quickly, fueling users to pledge to boycott H&M and other brands that signed a pledge to stop using Xinjiang cotton.

In this regard, the ‘New York Times’ reported the Sweden-based retailer posted a statement to its website in September, saying it had stopped sourcing cotton from China’s Xinjiang region. The statement, now removed, said the company was concerned “by reports from civil society organizations and media that include accusations of forced labor and discrimination of ethno-religious minorities” in the region.

Nike had allegedly made a similar decision. Noteworthy, China represents about 20 percent of Nike’s overall sales. PVH shares fell 3.4 percent in early action. According to ‘Business Insider’, at least 11 Western brands would suffer the Chinese consumers’ backlash. It’s the case of other retailers joining similar pledges, including the parent group of Calvin Klein, PVH (PVH) and shoemaker Converse, as reported by the ‘South China Morning Post’.