The air keeps escaping from Nike’s (NKE) stock price.
25 years
According to Yahoo Finance AlphaSpace, Nike stock is now underperforming the S&P 500 (^GSPC) by the largest margin in 25 years (see the chart below). The stock is down 35% year to date compared to a 13% advance for the S&P 500.
Since Nike CEO Elliott Hill officially took over as CEO on Oct. 14, 2024, the stock has shed about 49%.
Zoom out
The only thing Nike is “just doing” is serving up stretches of weak quarters and outlooks.
In late June, Nike reported fiscal fourth quarter revenue of $11.0 billion, reflecting a 1% decline on a reported basis and a 4% drop on a currency-neutral basis.
While the company’s diluted earnings per share of $0.72 appeared significantly stronger year over year, it was heavily distorted by a massive $0.52 per share one-time benefit from an expected tariff recovery.
The company projected fiscal first quarter revenues to be down by a low-to-mid single-digit percentage. It reiterated flat earnings per share growth over the next three quarters, excluding benefits from tariff recovery proceeds.
The company continues to struggle with execution issues under Hill, who recently replaced the company’s CFO. Changing sneaker preferences, cautious consumers, and hungry competitors like On Holding (ONON) continue to hold the company back and delay any signs of a turnaround.
“You gotta get back into the roots,” NBA star and longtime Nike-sponsored athlete LeBron James said about the brand’s struggles in a Boardroom interview on Yahoo Sports.
“You gotta get back to being out in the inner city, having runners … When I was coming up, you had people that was literally out in the communities talking to these younger generations, asking them what they like, what they don’t like,” James added.
Wall Street chatter
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Evercore ISI analyst Michael Binetti: “No hints yet that revenues can turn positive in the foreseeable future — we don’t see a clear reason to expand the P/E [ratio] from here (from 22x FY27 consensus EPS).”
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Goldman Sachs analyst Brooke Roach: “While we were pleased to hear of several greenshoots in the business (performance product sales growth / full-priced sales momentum / door refreshes / stronger gross profit margin delivery), management’s macro commentary is incrementally cautious and more than offsetting near-term greenshoots.”
Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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