Nike, once a rock-solid blue-chip stock, is facing some of its toughest challenges in years. The company’s stock has dropped 25% over the last 12 months, lagging far behind the S&P 500’s 24% gain. Revenue growth has stalled, North American sales have slumped, and competitors are making gains. Investors are now asking: has Nike hit bottom, or is there more pain ahead?
A Decade of Growth That Didn’t Meet Expectations
Nike entered the past decade with ambitious goals. Back in 2015, it projected its revenue would grow at a 10% annual clip, reaching $50 billion by 2020. But that didn’t happen. Instead, its five-year annual revenue growth averaged just 4%, reaching only $37.4 billion in fiscal 2020.
Several factors held Nike back. The collapse of Sports Authority in 2016 flooded the market with excess inventory. Converse sales slumped. North American and European growth slowed. And then came the COVID-19 pandemic, disrupting everything.
Despite these setbacks, Nike managed a strong post-pandemic rebound. From fiscal 2020 to 2023, revenue grew at an 11% annual rate, driven by the expansion of its Nike Direct business. That channel, which includes its own website and physical stores, grew from 33% of total sales in 2020 to 42% by 2023. But the momentum didn’t last.
The Market Turns Against Nike
After a promising rebound, Nike’s revenue has hit a wall. Its core North American market has weakened, offsetting gains in China and other international regions. Even Nike Direct, once a key driver of growth, has started to falter.
The competitive landscape is also shifting. Adidas is recovering, while brands like On Holding and Anta Sports (which controls FILA in China) are gaining ground. Lululemon, long known for its apparel, is expanding into footwear, taking more market share.
Nike Direct’s revenue has now declined for three straight quarters on a currency-neutral basis. Overall revenue growth is barely holding up, and the company is bracing for deeper declines ahead.
A look at recent Nike Direct and total revenue growth:
| Metric | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 |
|---|---|---|---|---|---|
| Nike Direct Revenue Growth (YOY) | 4% | 0% | -7% | -12% | -14% |
| Total Revenue Growth (YOY) | -1% | 0% | 0% | -9% | -9% |
Nike expects the decline to deepen in the coming quarters, putting more pressure on its turnaround efforts.
The Plan to Regain Momentum
Nike isn’t sitting still. It’s rolling out a three-part strategy to get back on track, though results so far are mixed.
- Wholesale Partnerships: Nike is trying to rebuild relationships with traditional retailers, shifting some focus away from Nike Direct. However, wholesale revenue is still declining, suggesting this won’t be a quick fix.
- Premium Product Strategy: The company wants to sell more full-price and premium products to improve margins. But this effort has been inconsistent. Margins improved in Q1 2025 but shrank in Q2 as markdowns increased. Another margin drop is expected in Q3.
- Investment in Innovation and Marketing: Nike is increasing spending on new product development and advertising. While necessary for long-term success, these expenses could weigh on short-term profitability.
Nike is also dealing with elevated inventory levels, a stronger U.S. dollar cutting into overseas sales, and shifting consumer preferences.
What’s Next for Nike’s Stock?
Wall Street isn’t optimistic in the short term. Analysts expect revenue to decline 10% and earnings per share to plunge 48% for the full fiscal year. Even if the turnaround gains traction, Nike is only projected to grow revenue by 2% and earnings by 19% in fiscal 2026.
The stock currently trades at 38 times forward earnings—high for a company with shrinking profits. Its 2.1% dividend yield isn’t enough to attract long-term income investors, and competitive pressures remain strong.
Unless Nike’s turnaround efforts show real progress, its stock could remain under pressure for the next year. This iconic brand isn’t going anywhere, but investors looking for a clear rebound may have to wait longer.
