"That's a tremendous inventory build," adds trader Guy Adami, managing director of stockMONSTER.com.
"It brings the China slowdown to our doorstep," adds Terranova.
Trader Karen Finerman, president of Metropolitan Capital, adds that this may be the tip of the iceberg. “This is bad news for every retailer with significant exposure to China,” she said.
In other words, on the eve of earnings season, the Street must confront the possibility that other companies may find themselves in similar circumstances as Nike.
“It worries me for Yum!” adds Terranova.
“And there’s another read through here,” adds trader Brian Kelly. “They also talked about rising labor costs and margins getting squeezed,” That too suggests other companies could find themselves having the same trouble."
"It's also negative for shoe sellers such asFootLocker," says Finerman.
All told, the traders think Nike earnings could trigger a sell-off broadly.
"The S&P is sitting right around that critical 1325 level," reminds Adami. This could certainly generate downward pressure.
Looking at Nike as a single stock story, although the after hours decline was substantial, most of the traders suggest staying away — at least for the time being.
But not Zack Karabell, of RiverTwice. He says, "This is a great company that isn't going anywhere. It's going to be around for years. I’m really interested in buying the name here and now on the pullback. But I will hold it for the long-haul."
Looking at the numbers a little more closely, Nike earned $549 million, or $1.17 cents a share, in the fourth quarter ended May 31, compared with $594 million, or $1.24 a share, a year ago.
Analysts, on average, had been expecting the company to earn $1.37 share, according to Thomson Reuters I/B/E/S.
Posted by CNBC's Lee Brodie
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Trader disclosure: On June 28, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Brian Kelly is long SPY CALLS; Brian Kelly is long QQQ CALLS; Brian Kelly is short YEN; Brian Kelly is short POUND; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long USB; Joe Terranova is long TCBI; Joe Terranova is long SBUX; Joe Terranova is long UPL; Joe Terranova is long PXD; Joe Terranova is long WFM; Joe Terranova is long NXPI; Joe Terranova is long HYG; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long LPX; Joe Terranova is long OIH JULY $34 CALLS; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long M; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Scott Nations is long SPY; Scott Nations is long C; Scott Nations is long BAC; Scott Nations is long JPM
CNBC.com with wires.
