This could be the worst year ever for Nike's stock, with sales set to fall further

By Bill Peters

CEO says Nike still has too many Jordan sneakers, while its sportswear suffers from a 'sea of sameness'

Nike's stock has been one of the weakest in the S&P 500 this year.

Nike investors will have to keep waiting for its turnaround to take hold, as the sneaker giant sees more sales declines ahead and stares down what could be the worst year on record for its stock.

Those declines have come as Nike (NKE) continues to deal with what CEO Elliott Hill on Thursday called a "sea of sameness" in its lifestyle gear, too many retro sneakers and an ailing China segment.

Hill said the company was taking steps to fix those issues, and was embarking on a $2.5 billion savings plan along the way. But in an echo of past remarks made by Nike executives over Hill's two-year tenure, he said it would "take time" for those efforts to pay off.

Those plans are unlikely to revive sales in the months ahead. Nike said it expects sales to fall by "high single digits" in its fiscal 2027, which runs through May. Nike forecast full-year adjusted earnings per share of $1.15 to $1.35. Analysts expected $1.68.

The news sent shares 8.5% lower after hours on Thursday. Based on Nike's after-hours price, shares are down around 50% year to date, putting it on pace for its worst year ever if those losses hold. The stock has been among the S&P 500's SPX biggest laggards this year.

Nike has tried to roll out new products to attract budget-conscious consumers and help it stand out from steeper competition. While some offerings - like its Vomero running shoes and a new Caitlin Clark sneaker that launched Thursday and quickly sold out - were hits, analysts have remained worried that its latest sneakers and gear overall haven't caught on. The company, under Hill, has tried to focus more closely on athletes' needs.

For Nike's first quarter, sales fell 4% from a year before to $11.21 billion. The company earned 48 cents a share, compared with 49 cents in the same period a year prior.

Analysts polled by FactSet expected sales of $11.32 billion for the quarter, which ended Aug. 31. They also anticipated adjusted earnings per share of 44 cents.

Sportswear made up a little under half of Nike's revenue for its first quarter. That revenue fell in the low-double-digit percentage range, management said. Some of that drop was intentional, as Nike tries to offload the gear it has had trouble selling. Some of it, however, reflected fading relevance.

"Overall, there's a lack of energy in the lifestyle space right now, which is impacting traffic," Hill said on Nike's earnings call on Thursday. "Yes, the consumer is cautious, but as the leader in the industry, it's on us to bring more creativity to sportswear."

He said that the company planned to break down the sportswear business into smaller segments to offer a wider, differentiated assortment.

Hill also said that in Greater China, where sales fell 26% during the quarter, Nike needed to become more locally relevant and pull back on discounts. He said most of the physical stores there that sell Nike hadn't had a refresh in the past seven years.

The company's $2.5 billion savings plan runs through fiscal 2031. That program, Nike said, includes around $1 billion of pre-tax charges, "primarily consisting of employee-related costs," as well as roughly $300 million in severance costs recognized in the last fiscal year.

Hill, during Thursday's call, said the changes would trim the number of roles at the company. The initiative will also establish a new campus in India, Nike said.

Nike has been trying to regain the momentum it had in the '90s, when the brand was virtually synonymous with Michael Jordan. But other brands, like Adidas (ADDYY) and On Running (ONON), have attracted sneakerheads and star athletes. Soccer star Kylian Mbappe, for instance, left Nike to sign with On, that sneaker maker said last month.

Hill on Thursday said Nike had inundated the market with its retro gear, and had been demanding too much from those items. He said that Nike planned to "deliberately reduce the volume and frequency of specific Jordan retro launches" to rebuild intrigue. The company has been trying to sell off casual throwback sneakers, like Dunks, that have fallen out of style.

"When consumers see the Jumpman, it should feel special" Hill said, referring to the iconic airborne silhouette of Michael Jordan. "It should feel earned."

-Bill Peters

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10-01-26 1921ET