When Nike (NYSE: NKE) reported its fiscal 2023 first-quarter financials on Sept. 29, the results looked solid at first glance. The business generated revenue of $12.7 billion and earnings per share of $0.93 in the quarter ended ended Aug. 31, both exceeding Wall Street analyst estimates. However, the stock tanked by double-digit percentages immediately following the announcement. 

Investors need to pay attention to a huge issue that this top apparel company is currently facing, which revealed itself in the latest financial update. 

While Nike's sales increased 3.6% year over year -- quite a strong showing given that revenue grew 15.6% in the prior-year quarter -- what spooked investors in the earnings announcement was the fact that inventories shot up 44%. And this balance, now at $9.7 billion, sent the stock sharply lower. 

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Source Fool.com