Will Nike Investors' Frustrations End Anytime Soon?

Geoffrey Seiler, The Motley Fool

Sat, Mar 22, 2025, 8:00 AM 5 min read

If you're a Nike (NYSE: NKE) investor, it wouldn't be surprising if you had a growing sense of frustration owning the stock. After all, it's well off the highs of over $170 a share it hit back in November 2021, and down more than 30% over the past year. The stock has barely budged the past five years, and its shares were sinking once again after its latest earnings results.

Let's take a closer look at Nike's recent earnings to see if there are any signs of a turnaround in sight for the iconic sneaker and apparel maker.

Nike CEO Elliott Hill has only been on the job for under six months, and finds himself inheriting a difficult situation, looking to turn the company around. Former CEO John Donahoe showed his lack of experience running an apparel brand by eschewing innovation and thinking the company could solely rely on its brand reputation. He leaned heavily into its classic footwear segment, which includes such brands as Air Jordan and Air Force 1. Meanwhile, he shunned wholesale relationships in order to focus more on direct selling.

His plan didn't work, and Nike overproduced its classic brands, leading the company to become heavily promotional to clear inventory. At the same time, its other segments lacked a sense of newness.

Hill is now trying to reverse the damage that has been done through his "Win Now" action plan. The company is trying to rightsize its classic footwear segment, while turning toward innovation and freshness in its sports performance category to lead the way. It's investing heavily in both short-term and long-term innovation, while looking to add new models, assortments, colors, and materials.

The company is also pulling back on promotions within its direct channels, instead looking to return to a full-priced brand. It is also looking to develop a better relationship with its wholesale partners. Going forward, it will look to balance direct and wholesale selling, while initially focusing on the U.S., China, and U.K. to drive growth.

However, these changes will take time to make a positive impact, and in the near term, will cause some pain, which both Nike's fiscal Q3 results and its guidance reflect.

For its most-recent quarter, Nike saw revenue fall 9% to $11.3 billion, with Nike brand revenue also down 9% to $10.9 billion. Nike Direct revenue dropped even more, down 12% to $4.7 billion. Digital sales led the way lower.

The Chinese market was a particular weak spot, with revenue down 17% in the quarter to $1.7 billion. It said this is the market where it has been most proactive in cleaning up its inventory.