Shares of NIKE Inc. (NKE Quick QuoteNKE - Free Report) hit a new 52-week low of $37.95 on Sept. 3, before recovering slightly to close at $38.40. The stock has remained volatile in recent months, reflecting softer consumer demand, pressure in Sportswear and the company’s ongoing business reset. In fourth-quarter fiscal 2026, revenues declined 1% year over year on a reported basis and 4% on a currency-neutral basis. NIKE Direct revenues fell 9%, hurt by a 12% decline in NIKE Digital and a 7% decrease in NIKE-owned stores, while wholesale revenues increased 1%. 

The operating environment also became more difficult during the quarter. Retail sales trends decelerated beginning in mid-April, with pressure on traffic and discretionary spending particularly affecting Sportswear. The category declined double digits, even as performance sports grew mid-single digits and recorded positive retail sales comparisons across Running, Training and Global Football.

NIKE shares have lost 14% in the past three months compared with the broader industry and the Consumer Discretionary sector’s decline of 13.8% and 0.8%. The S&P 500 has risen 3.5% in the same period.

NIKE 3-Month Stock Return

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NKE’s performance has also lagged that of its peers. In the past three months, Adidas AG (ADDYY Quick QuoteADDYY - Free Report) and Steven Madden (SHOO Quick QuoteSHOO - Free Report) have declined 10.7% and 21.7%, respectively, while Wolverine World Wide (WWW Quick QuoteWWW - Free Report) has jumped 21.7%.

At the current price, the stock has moved down 50.1% from its 52-week high of $76.97. The leading athleticwear retailer currently trades below the 50-day and 200-day simple moving averages.

NKE Trades Below 50 & 200-Day Moving Averages

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What Is Keeping Pressure on NIKE?

Sportswear remains one of NIKE’s biggest challenges. Sell-through in NIKE Sportswear and Jordan Streetwear continues to be weak, contributing to discounting pressure and softer future order books. Importantly, the two businesses together account for approximately half of NIKE’s revenues and are expected to remain negative in fiscal 2027, although improvement is anticipated in the second half.

NIKE has already reduced classic footwear franchises by more than $2 billion during fiscal 2026 as it rebalances the portfolio toward newer performance and lifestyle products. While this should help create a cleaner marketplace over time, the transition is weighing on current sales as older franchises are reduced before newer products reach scale.

Regional pressures are another concern. In EMEA, fourth-quarter revenues fell 6%, NIKE Direct declined 16%, and Digital dropped 24%. The geography continues to deal with elevated inventory and promotional activity, while Sportswear remains challenged. Inventory dollars were up low double digits, prompting tighter buying and accelerated liquidation efforts.

Greater China remains even weaker. Revenues declined 17%, NIKE Direct fell 14%, Digital dropped 25%, and wholesale revenues decreased 19%. Although inventory was down double digits and full-price realization showed improvement, near-term revenue trends are expected to remain broadly in line with recent performance.

NKE’s Near-Term Outlook Remains Challenging

The near-term outlook points to continued pressure. NIKE expects first-quarter fiscal 2027 reported revenues to decline in the low-to-mid-single-digit range. Gross margin is expected to be slightly positive, but second-quarter revenues are projected to decelerate sequentially because of difficult comparisons related to prior-year EMEA digital promotions and the timing of North America wholesale shipments. 

The broader environment is not offering much help. NIKE cited evolving tariff policies, Middle East disruption, oil prices and pressure on consumer traffic and spending as potential headwinds. The company does not expect the operating environment to improve meaningfully over the next six months.

Understanding NIKE’s Growth Prospects

Despite these challenges, there are clear areas of momentum. NIKE Running has posted five consecutive quarters of double-digit growth, adding roughly $1 billion to the business over that period. In fiscal 2026, the company also gained five percentage points of running market share in statement footwear across Western Europe and North America. 

Wholesale relationships are improving as well. Full-year wholesale revenues grew 4%, led by double-digit growth in North America, while more than 15,000 spaces in wholesale doors were refreshed globally. NIKE also elevated more than 150 of its own stores with sport-led experiences during fiscal 2026. 

Product newness will become increasingly important. More than a dozen new NIKE Sportswear footwear styles are planned for the second half of fiscal 2027, while products developed under the reorganized sport teams are expected to begin reaching the market in spring 2027. 

There are also signs of margin stabilization. Excluding the tariff recovery benefit, fourth-quarter gross margin declined only 10 basis points, better than previously expected, helped by lower discounts, cancellations and sales-related reserves in North America. Supply-chain restructuring undertaken during fiscal 2026 is also expected to contribute to gross-margin expansion in fiscal 2027.

NKE’s Estimate Revision Trend

The Zacks Consensus Estimate for NKE’s fiscal 2026 EPS suggests year-over-year growth of 10.1%, while sales estimates indicate a decline of 0.8%. For fiscal 2027, the Zacks Consensus Estimate for NIKE’s sales and EPS implies 4.2% and 34.3% year-over-year growth, respectively.

The Zacks Consensus Estimate for NIKE’s fiscal 2026 and 2027 EPS has remained stable in the past 30 days.

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NIKE’s Valuation

NIKE is currently trading at a forward 12-month P/E multiple of 20.15X, exceeding the industry average of 17.78X and the S&P 500’s average of 20.10X.

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At 21.4X P/E, NIKE is trading at a valuation much higher than competitors like Adidas, Wolverine World Wide and Steven Madden. The forward 12-month P/E ratios for Adidas, Wolverine World Wide and Steven Madden stand at 13.54X, 11X and 17.03X, respectively, all below NKE’s multiple.

Here’s How to Play NKE

NIKE’s near-term outlook remains challenging, as reflected in its weak stock performance, recent 52-week low and continued volatility. Softer consumer demand, persistent weakness in Sportswear, regional pressure in Greater China and EMEA, inventory cleanup efforts and tariff-related uncertainties are weighing on the business. Negative earnings estimate revisions add to concerns, while the stock’s premium valuation relative to peers appears difficult to justify amid limited near-term earnings visibility. 

However, NIKE’s long-term growth prospects remain supported by sport-led innovation, an expanding product pipeline, marketplace elevation and strengthening wholesale relationships. Running continues to deliver strong momentum, while Global Football and other performance categories are showing encouraging trends. The company is also introducing more than a dozen new Sportswear footwear styles in the second half of fiscal 2027 and expects products developed under its new sport-focused operating model to reach the market from spring 2027. Given the near-term uncertainties, investors may prefer to remain cautious before entering the stock. 

Meanwhile, long-term investors should closely monitor this Zacks Rank #3 (Hold) company’s Sportswear recovery, product momentum, margin improvement and marketplace execution for clearer signs of a sustainable turnaround. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.