Everton have conceded 15 times in 11 matches so far this season.
The Toffees are currently having to deal without Phil Jagielka and Leighton Baines due to injury, and Nicholas feels they are lacking in quality cover.
Although Ramiro Funes Mori has come in to replace Jagielka, Nicholas feels that Everton do not have the required depth in their ranks.
“I don’t think Everton are spoilt for choice in any area,” he said. “They have a couple of strikers, but you need that. That’s standard practice.
“Three or four weeks ago people were telling us [they have a big squad], and their youngsters have done pretty well. But where’s the stand-out defender that’s going to come in and replace Phil Jagielka?
“Sylvain Distin they let go, and it was the right time to change it, but they needed two or three to cover that.
“John Stones was virtually out the door at one stage, going to Chelsea. If he’d have gone, where would they be now?”
Despite Nicholas’ questions over Everton’s defence, Roberto Martinez’s side have looked relatively secure over the campaign to date.
Everton have conceded 15 times in their opening 11 league matches, leaving them with a fairly middling defensive record.
The Toffees have generally been better going forward than at the back under Martinez, though, and they can take heart from the potency of their attacking players.
Only four teams have scored more goals than Everton to date this campaign, with the Merseyside outfit currently sitting in ninth place in the Premier League table.