Nike (NKE) was downgraded by Jefferies ahead of the company’s first-quarter earnings, which will be released on Thursday, September 28th. Forrester Research Research Analyst Sucharita Kodali joins Yahoo Finance Live to discuss what to watch from the company's results.

“The challenge is... that Nike has been very dependent on the Asian market, certainly on the Chinese consumer," Kodali says. “Not only do you have issues with the softening of the Chinese consumer and their spending ability, but also just a lot of… geopolitical risk."

Kodali notes that “the biggest issue for a company like Nike is if there is a glut of inventory, that may potentially have an impact on whether or not the brand is as desirable because so much of the value of the most desirable products is the scarcity, not the oversupply.”

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Video Transcript

- Nike stock heading lower today following a downgrade from buy to hold from Jefferies, citing the resumption of student loan repayments next week becoming a key pain point for consumer stocks. It comes just days ahead of the company reporting earnings on Thursday. And here to discuss further is Sucharita Kodali from Forrester Research. Thank you for joining us here today.

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I'm wondering what you're expecting. A lot of people mentioning the student loan payments, but we also have the China story. Not sure if that's totally in the rearview mirror. What are you looking for?

SUCHARITA KODALI: Yeah. I think that the China story is probably the biggest one here for Nike. The challenges is that Nike has been very dependent on the Asian market, certainly on the Chinese consumer. Not only do you have issues with the softening of the Chinese consumer and their spending ability but also just a lot of just geopolitical risk that is there. Everything from manufacturing to just whether or not there is going to be enough of a detente to allow the resumption of trade as we knew it across borders.

So I think that's really the biggest issue for Nike since such a big part of its overall revenue mix is coming from international sources. The student loan repayment issue, I'm not as concerned for a company like Nike. They are a where consumers who want their product will find ways to purchase their product. So the student loan repayment issue has more of an impact on sectors like automotive, potentially even housing. I don't think it's going to have as much of an impact on branded apparel, to be completely candid.