Nike's turnaround strategy is taking way longer than expected, and a Wall Street firm is losing hope.
Shares of Nike fell 1% to $35.62 Friday after Bank of America downgraded the stock to Underperform from Neutral and slashed its price target to $30 from $47. The bank's analysts cited concerns about the company's lack of innovation, a decline in North American wholesale revenue, and weakening consumer demand in China.
Bank of America isn't the only Wall Street firm that is negative on the stock: 11% of analysts covering Nike rate it Sell, according to FactSet. That marks Nike's highest percentage of Sell ratings in at least 30 years, according to Dow Jones Market Data.
Investors have also begun to lose faith as well. Nike shares have slid 44% this year so far.
Nike's turnaround effort, dubbed as its "Win Now" strategy, has taken a long time to materialize. Since CEO Elliot Hill took over at Nike in 2024, shares have fallen 57%, according to Dow Jones Market Data.
Nike has faced a weakening consumer landscape as shoppers have pulled back on discretionary lifestyle footwear. Bank of America noted that sales of Nike's classic styles, such as its Air Force 1 and Dunks sneakers, have declined globally, and new product launches have yet to make up for that loss.
Wholesale backlog continues to be an issue for Nike, BofA adds. In North America-which was previously doing well-stores bought plenty of inventory, but shoppers haven't bought it off shelves quickly enough. In turn, stores are pulling back on future orders.
The analysts added that demand for athletic gear in China specifically has softened, and competition from local brands remains high. China is Nike's largest international growth engine outside of the U.S.
Bank of America wrote that Nike has also intentionally pulled back from selling through certain third-party online channels in China to protect its brand image, which will likely force discounting and squeeze profits in the near term.
Even without the demand problem in China though, Nike would still struggle, the analysts say, as its classic shoe lines lose momentum and retailers grow cautious about placing new orders.
Nike shares peaked above $170 in November 2021, thanks to momentum from its direct-to-consumer digital shift. By October 2024, however, the stock fell to about $79, around the time Hill became CEO.
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