Nike's shares tumbled more than 4% on Monday, closing at their lowest level since September 2014, as the sportswear giant's prolonged decline deepened. The stock has now fallen roughly 78% from its November 2021 record high, erasing over $200 billion in market capitalization. The latest drop came after a JPMorgan downgrade and fresh data pointing to softening demand for premium athletic footwear.
Turnaround under scrutiny
Investors are increasingly questioning whether CEO Elliott Hill's turnaround strategy can revive growth. Hill, who returned to Nike in 2024 after retiring, has shifted focus back to sports performance and rebuilding relationships with wholesale partners like Foot Locker, reversing the previous emphasis on direct-to-consumer (DTC) sales and fashion-forward products.
While some analysts see early signs of progress—Jefferies noted that fiscal fourth-quarter results were better than feared and that the renewed sports focus is starting to pay off—the overall sales picture remains weak. Nike's DTC business, including its own stores and digital platform, continues to struggle, complicating the company's efforts to restore wholesale distribution without cannibalizing its own retail operations.
Earnings beat overshadowed by gloomy outlook
In its most recent quarterly report, Nike posted adjusted earnings of 20 cents per share, excluding a 52-cent benefit from expected tariff recovery, on revenue of $11 billion—both slightly above analyst expectations. However, management's guidance dampened any optimism. The company now expects revenue to decline by low- to mid-single digits from March through November, a steeper drop than its previous forecast of a low-single-digit decline. Earnings are expected to remain roughly flat over the same period, leaving investors uncertain when the downturn will bottom out.
Secondary-market prices signal ongoing weakness
Data from UBS Evidence Lab added to the bearish narrative. Secondary-market prices for Nike brand footwear fell 2.9% year-over-year in July, marking the third consecutive monthly decline and a deterioration from June's 1.7% drop. Jordan brand prices also slipped 2.8% in July, reversing a 2% gain in June. UBS described the data as a "modest negative" for Nike, noting that secondary-market prices serve as a useful proxy for brand momentum.
China remains a structural drag
Perhaps the most significant challenge is Nike's business in China, which has now declined for eight consecutive quarters. Annual revenue in the market has fallen roughly 30% since 2021, reaching its lowest level in eight years at the end of May. China was once a key growth engine for Nike, but intensifying competition from local brands and shifting consumer preferences have eroded its position.
The broader athletic footwear market is also showing signs of strain. On Holding, a Swiss competitor, reported second-quarter sales below expectations and issued cautious full-year guidance, sending its shares down 19%. That raised concerns that weakness in premium sneakers may be industry-wide rather than company-specific.
Nike's stock has been under pressure from multiple angles: a slower-than-expected turnaround, persistent DTC weakness, China's decline, and a cautious outlook. Investors are waiting for concrete evidence that demand is stabilizing, new products are gaining traction, and pricing power is returning. Until then, the stock's slide may continue.
This article is for informational purposes only and does not constitute financial advice.
