Nike’s Turnaround Is ’Going to Take Time.’ Meanwhile, The Stock Is Sliding. Here’s What It Means for Your Portfolio.

Patience isn't a virtue on Wall Street. Nike's promised revival is hitting the long game, and investors are losing theirs.

The Slow Burn

Forget overnight fixes. The blueprint for Nike's comeback reads like a marathon training plan—grueling, incremental, and with no finish line in sight. Analysts whisper about 'structural shifts' and 'brand recalibration,' corporate speak for a slog that won't show up in next quarter's earnings. The market hates a mystery, and right now, Nike's playbook is full of them.

The Price of Waiting

While management preaches patience, the ticker tells a different story. Every day spent 'realigning' is another day the stock charts look like a downhill ski run. It's the classic finance conundrum: bet on the long-term vision and watch your short-term gains evaporate. Some funds are already cutting their losses, bypassing the turnaround narrative for quicker plays elsewhere. In today's market, a 'multi-year strategy' might as well be a eulogy.

The Bottom Line

Nike isn't just selling shoes; it's selling time. And time, in trading terms, is the most expensive commodity of all. The company's fate hinges on whether investors believe in a future that's years away—a tough ask in an era of instant gratification and algorithmic day trades. One cynical take? This is what happens when a brand tries to outrun its own shadow. The turnaround is coming. Just don't check your portfolio while you wait.

Key Takeaways

• Nike shares, which are down 10% today, are stuck below the prices that predated Elliott Hill's days as CEO.
• Investors initially welcomed the news that Hill would return to Nike. Today's drop indicates that they're looking for more before declaring the turnaround a success.

Nike hoped a new CEO could get its stock rising again. So far, the change just hasn't done it.

Shares of Nike (NKE) have fallen some 20% since the beleaguered athleticwear-and-gear company said it WOULD bring back legendary leader Elliott Hill—counted since their close the night before the announcement—in September 2024. More than a year later, it's unclear when the slide will stop.

Nike says the business is midway through a turnaround. This message is largely resonating with analysts, but Friday’s 10% drop in stock prices shows that investors may not be as convinced that a comeback is just around the corner.

Why This News Matters to Investors

Nike's efforts to improve "brand equity" and drive full-price sales come at a time when consumers are particularly price-sensitive. The company is pulling back on promotions while retailers and restaurants report that even high-income households are curtailing their spending.

Nike reported a “mixed bag” of results Thursday after what was “very much a ‘show me’ quarter,” said David Bartosiak, a stock strategist at Zacks Investment Research.

Nike’s second-quarter numbers beat analysts’ expectations, but highlighted several challenges facing the company. Revenue ROSE 1% year-over-year to $12.4 billion, but profit declined 32% to $792 million. The company is contending with slow sales in China and roughly $1.5 billion in annual costs stemming from tariffs.

“This was not a ‘clean’ quarter,” Bartosiak said.

Hill said Thursday that he is confident Nike is headed in the right direction, but it is being nuanced about adapting its approach in some 190 countries.

“It's just going to take time," Hill said on a conference call Thursday, according to a transcript made available by AlphaSense. "So I will just sort of point to the place we focus first, which is North America, and we're having great success there.”

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Revenue rose 9% year-over-year in North America, with sales to wholesalers—a company priority—growing 24%, Hill said. Investors may be spooked about consumers spending 10% less at Nike’s website and stores, but Bank of America suggested this was a reaction to the company cutting promotions and focusing on full-price sales.

“We view this quarter's results as a successful execution of this strategy,” Bank of America said.

Investors may be less optimistic about Nike's latest numbers, but they contained “redeeming” data points, Kevin McCarthy, senior research analyst at Neuberger Berman, said on CNBC. Profit margins would have grown, he said, if not for tariffs.

“I’d be a buyer on a day like today,” Berman said.