Nike (NYSE: NKE) is the leading sportswear brand, with $46 billion in annual revenue. But the company has dealt with weak sales over the past few years. The stock is currently trading near $61, down 22% over the last 12 months and 65% from its all-time high.
Last year, the company brought in longtime company veteran Elliott Hill as its new CEO to turn things around. The latest quarterly financial results show progress on the turnaround plan, but management’s comments suggest it still has a way to go before investors see meaningful results. Here’s what this means for the stock’s prospects, and whether investors can see a rebound soon.
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The good news for investors is that Nike’s home market, North America, is showing momentum. Revenue grew 9% year over year last quarter, reaching $5.6 billion. The running category saw 20% growth for the second straight quarter — an important signal that Nike’s innovation and new styles are resonating with customers.
The bad news is that this may not be a quick turnaround. CFO Matt Friend noted on the December earnings call that its “progress will not be linear.” Each brand, sport, and geography, he added, is recovering at different speeds.
Greater China remains a problem for the brand. Revenue fell 17% over the year-ago quarter. Hill acknowledged that the work they are doing to turn China around is just a start. “It will take time,” Hill said.
Revenue outside North America was down by more than 5% year over year last quarter. Despite strong growth in its home market, weakness in international markets caused total revenue to rise just 1% year over year.
The company’s strategy to improve operating profit margins back above 10% will also take time. Nike’s marketing, or demand creation expense, has been growing faster than revenue, cutting into earnings. Nike’s earnings per share fell 32% year over year in the quarter and 30% through the first half of fiscal 2026.
Even after the sell-off, the stock is still not cheap by traditional standards. It’s trading at 39 times this year’s earnings estimate. Even if you look ahead to the improvement expected next year, the stock is still trading at a rich forward price-to-earnings multiple of 26. It’s going to have to surprise investors with a much better quarter to lift the stock higher in the near term.
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