NIKE Inc. NKE has dropped 6.2% since reporting third-quarter fiscal 2025 results on March 20. While earnings per share (EPS) and revenues exceeded the Zacks Consensus Estimate, investor concerns stem from year-over-year declines in both metrics. Sales were impacted by weak traffic, which fell in the double digits, and retail performance lagged expectations. Despite macroeconomic challenges, the sports market continues to grow in China.
NKE provided a cautious fiscal fourth-quarter outlook, citing the expected impacts of new tariffs on imports from China and Mexico. Management anticipates the fiscal fourth quarter to reflect the peak effects of its ‘Win Now’ strategy, with revenue and margin pressures beginning to ease. The company faces ongoing external uncertainties, including geopolitical tensions, tariffs, currency fluctuations and evolving tax regulations. Additionally, macroeconomic volatility and its effect on consumer confidence have been concerning.
For fourth-quarter fiscal 2025, NKE expects a revenue decline in the mid-teens, though at the lower end, due to North American shipment timing and foreign exchange headwinds. The gross margin is projected to drop 400-500 bps, indicating the impacts of prior-year restructuring charges. SG&A expenses are forecast to rise in the low to mid-single digits, including last year’s restructuring charges. The company continues to manage costs while investing in ‘Win Now’ initiatives, particularly in demand creation.
NKE’s lackluster third-quarter fiscal 2025 performance compounds ongoing challenges, including weakness in its lifestyle segment and a decline in digital revenues, reflecting shifting consumer preferences. The company is also grappling with lower retail traffic and sell-through rates in Greater China, a key market in its global strategy. These factors have contributed to slower revenue growth and tighter profit margins.
These factors have affected the Beaverton, OR-based company’s share price performance, which has slumped 27.2% in the past year. Shares of the company have underperformed its industry peers, which collectively declined 24.9% in the past year. The NKE stock compared unfavorably with the broader Consumer Discretionary sector and the S&P 500 Index’s growth of 3.7% and 9.3%, respectively, in the same period.
NKE’s One-Year Price Performance
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NIKE's performance is notably weaker than its competitors lululemon athletica inc. LULU and Skechers SKX, which have declined 13.3% and 2.8%, respectively, in a year. NKE has also lagged Adidas’ ADDYY 8.5% growth in the same period.
At the current share price of $67.39, NIKE trades close to its 52-week low mark of $65.17, reached on March 21. The stock price reflects a 3.4% premium to the company’s recent 52-week low. Meanwhile, the NKE stock’s price reflects a 31.3% discount from its 52-week high of $98.04. NIKE trades below its 50 and 200-day moving averages, indicating a bearish sentiment.
NIKE Stock Trades Below 50-Day & 200-Day Moving Averages
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NKE’s Estimate Revision Trend
The Zacks Consensus Estimate for NKE’s fiscal 2025 EPS moved up 2.4% in the last seven days, while the same for fiscal 2026 EPS edged down 0.9%.
For fiscal 2025, the Zacks Consensus Estimate for NIKE’s revenues and EPS implies year-over-year declines of 10.4% and 46.6%, respectively. For fourth-quarter fiscal 2025, the consensus mark for revenues and EPS indicates 11.3% and 74.3% year-over-year declines, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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Premium Valuation for NIKE Stock
NKE is currently trading at a forward 12-month P/E multiple of 30.4X, exceeding the industry average of 24.54X and the S&P 500’s average of 20.77X.
Though trading much below its five-year high of 48.27X, the current valuation may be considered expensive, given the significant downside risks if the company's ongoing perils are not resolved for a prolonged period.
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Can Investors Be Hopeful About NKE’s Strategies
Despite the ongoing challenges, NIKE is on track with its actions to reposition itself to be more competitive and drive sustainable, profitable long-term growth. The company is intensifying its focus on sports, speeding up the introduction and expansion of products and innovations. NIKE is accelerating product diversification by introducing performance and lifestyle footwear while reducing its reliance on classic franchises.
With innovations like the Pegasus Premium, Vomero 18 and Air Max platforms, alongside a more segmented and differentiated wholesale strategy, NIKE is positioning itself for sustainable growth by catering to evolving consumer preferences and expanding its market reach across key global regions.
The company is leveraging its deep connection to sports by amplifying athlete-driven storytelling and engaging consumers through major sporting events like the Super Bowl and NBA All-Star Weekend. By aligning its brand messaging with cultural moments and investing in impactful marketing, NIKE aims to reinforce its brand distinction, enhance consumer loyalty and drive long-term growth.
NKE is revitalizing its digital and retail strategy by reducing promotions, improving premium brand positioning and refining its go-to-market processes. By strengthening partnerships with wholesale retailers and optimizing its NIKE Direct ecosystem, the company is creating a more seamless and engaging shopping experience, ultimately driving margins and brand loyalty.
How to Play the NIKE Stock?
NKE's strategic initiatives lay the foundation for long-term growth by strengthening its competitive position, expanding its product range and deepening consumer engagement. Through accelerated innovation, diversified offerings and an improved retail and digital strategy, the company is adapting to shifting market trends while maintaining its leadership in sports and lifestyle apparel. Its emphasis on key global markets, athlete-driven storytelling, and premium brand positioning supports a resilient and sustainable growth outlook despite industry challenges.
However, near-term pressures persist as NIKE navigates its product realignment and inventory adjustments. Investors should closely watch the company's efforts to stabilize sales, improve margins, and manage its digital and international transitions. Given its premium valuation and slowing growth, a cautious approach may be warranted while NIKE works through its strategic transformation and broader economic challenges. The stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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NIKE, Inc. (NKE) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
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