Published on: 2026-08-18
Updated on: 2026-08-18
Nike closed Monday at $39.09, its lowest level since 2014 and roughly 78% below its November 2021 record close. The latest selloff came amid renewed concern over athletic demand, yet Nike’s four-year collapse runs deeper because Running and wholesale are recovering while Direct, digital and China remain weak.
Nike has also removed more than $2 billion of older footwear volume before replacement products have reached scale, making FY2027 the first real test of whether the comeback is delayed or fundamentally broken.
Nike closed at $39.09 on August 17, roughly 78% below its November 2021 record and at its lowest closing level since 2014.
Wholesale rose 4% currency-neutral in FY2026, while Nike Direct fell 8% and Brand Digital dropped 12%.
Nike removed more than $2 billion of classic footwear volume before its replacement product pipeline reached scale.
Greater China revenue is about 23% below FY2024, while regional EBIT has fallen nearly 45%.
Running has delivered five straight quarters of double-digit growth, yet Sportswear and Jordan Streetwear still represent roughly half of Nike’s revenue.
Nike generated $46.4 billion of revenue in FY2026, down 2% currency-neutral even as Running delivered five consecutive quarters of double-digit growth and added roughly $1 billion in revenue. Running’s recovery has still not been large enough to return Nike to growth.
Direct, digital, Greater China and major lifestyle franchises remain under pressure, allowing strong Running growth to coexist with weak company-wide results. Nike’s problem is no longer an absence of improvement. The improvement has yet to reach enough of the business.
Nike removed more than $2 billion of classic footwear franchise volume during FY2026 as it cut oversupply and reduced its dependence on ageing styles. The reset is intended to restore scarcity, improve full-price selling and create room for newer products.
More than a dozen new Sportswear footwear styles are due in the second half of FY2027, while spring 2027 brings the first products created from the initial brief to launch under Nike’s new sport-led structure.
Nike has already removed the old revenue. Much of the new revenue is still waiting for the product pipeline.
The gap is especially costly because Sportswear and Jordan Streetwear account for roughly half of Nike’s revenue and are expected to remain under pressure through FY2027 before improving later in the year. Running can recover sharply and still fail to offset weakness across franchises of that size.
Nike spent years steering more sales toward its own stores, apps and websites. FY2026 reversed that strategy’s economics.
Nike Direct fell 8% currency-neutral, Brand Digital declined 12%, and digital revenue dropped by about $1 billion to $8.6 billion as traffic weakened.
North America shows the reversal most clearly. Wholesale revenue rose 14% currency-neutral, while Nike Direct declined 6% and digital sales fell 10%. The channel Nike once pulled away from is now recovering faster than the one it spent years prioritising.
Wholesale can restore reach, yet it cannot replace demand on Nike’s own platforms. Until digital traffic improves, wider distribution can support sales without proving Nike has rebuilt enough demand to revive its direct business.
Greater China revenue fell from $7.55 billion in FY2024 to $5.85 billion in FY2026, down about 23%. Regional EBIT dropped from $2.31 billion to $1.28 billion, almost 45%, leaving profitability deteriorating nearly twice as fast as sales.
Digital is the sharpest pressure point. Greater China digital sales fell 29% currency-neutral in FY2026, while gross margin dropped from 50.2% in FY2024 to 45.7%.
From January 2027, Nike will concentrate its third-party digital presence in China around official flagship stores on Tmall, JD.com and Douyin alongside Nike.com.cn and the Nike App. Partner-operated online storefronts will largely stop selling Nike products as the company reduces marketplace fragmentation.
The reset gives Nike tighter control over pricing, presentation and distribution while the region is already contracting. Nike is losing far more profit than sales in China, raising the stakes of its 2027 marketplace reset.
Nike’s fourth-quarter profitability gives a much stronger impression of recovery than the underlying business delivered. Gross margin jumped 890 basis points to 49.2%, yet roughly 900 basis points came from the expected recovery of previously paid IEEPA tariffs.
| Metric | Reported | Ex-tariff recovery |
|---|---|---|
| Gross margin | 49.2% | ~40.2% |
| YoY margin change | +890 bps | ~−10 bps |
| EPS | $0.72 | ~$0.20 |
Almost the entire reported margin improvement came from the tariff recovery, while roughly 72% of quarterly EPS was tied to the same benefit.
Without that recovery, gross margin would have been about 40.2%, slightly below the prior year, while EPS would have been roughly $0.20 rather than $0.72. Nike’s headline profit numbers therefore improved far more dramatically than its underlying operations.
The distinction raises the bar for the turnaround. Future earnings growth will need to come from stronger demand, healthier full-price sales and better operating margins rather than a one-off accounting benefit.
Monday’s selloff intensified as On Holding’s latest results and outlook renewed concern over athletic demand. That explains part of the immediate move, not the scale of Nike’s four-year decline.
On still increased second-quarter sales 21.6% currency-neutral, with direct-to-consumer revenue up 34.3%. Hoka’s latest quarterly sales rose 7.7%, while Lululemon reported a 6% decline in Americas comparable sales in constant currency. The category is uneven, not uniformly weak.
On’s growth shows that consumers are still spending on products they want. Nike faces the same cautious backdrop as its rivals, yet category weakness alone cannot explain a stock that has lost nearly four-fifths of its value.
A weaker industry can delay Nike’s recovery. It cannot indefinitely explain why competitors continue taking demand.
Spring 2027 brings the first products developed entirely under Nike’s new sport-led structure, followed by a larger wave of Sportswear launches through the second half of FY2027.
Running has already proved that Nike’s new approach can work in one category. Spring 2027 will show whether that momentum can spread to businesses large enough to move the company.
By then, the recovery should be visible beyond Running.
Nike Direct and Brand Digital stabilise, with growth returning without heavier discounting.
Sportswear and Jordan Streetwear return to growth, showing newer products can replace the legacy franchises Nike has reduced.
Greater China stops contracting at double-digit rates, with regional profit beginning to stabilise.
New launches hold full-price demand, avoiding the oversupply Nike spent FY2026 clearing.
By spring 2027, isolated strength in Running will no longer be enough. Nike will need evidence that the recovery has spread into the businesses large enough to change its growth rate.
Nike stock has fallen because revenue growth stalled while Direct, digital and Greater China weakened, and Nike removed billions of dollars of older footwear volume before replacement products reached scale. Monday’s selloff added to a decline that began years earlier.
At $39.09 and FY2026 diluted EPS of $2.10, Nike trades at roughly 19 times reported trailing earnings. The stock is far cheaper than at its 2021 peak, yet earnings have also fallen and reported FY2026 profit includes the tariff-related benefit, making the underlying valuation less obviously cheap than the share-price decline suggests.
On and Hoka continue to grow in performance footwear while Nike rebuilds its product pipeline, with On’s latest constant-currency sales up 21.6% and Hoka revenue up 7.7%. Nike also gained five points of statement-running footwear share across North America and Western Europe in FY2026, showing the competitive picture is becoming more mixed rather than a one-way loss.
Further downside becomes more plausible if FY2027 revenue expectations weaken, underlying margins deteriorate, or new Sportswear products fail to revive demand. A 78% drawdown does not create a floor if earnings expectations continue moving lower.
Nike’s November 16–17 Investor Day is the next opportunity for management to attach measurable targets to the turnaround. Revenue growth, margin recovery and a healthier Direct business need clearer timelines after more than a year of restructuring.
Nike has spent the turnaround explaining what it is changing. November is when it starts putting numbers against what those changes are supposed to deliver.
