Nike Faces 40% Slide as Turnaround Proof Nears

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•  26 Aug 2026
 

$NKE Nike Inc. enters the final months of 2026 with investors still waiting for clear evidence that the turnaround announced nearly two years ago is working. The stock has lost more than 39% since the start of the year, and without a significant recovery by the end of December, this will be its fifth consecutive annual decline, an unprecedented streak for the company. Jordan brand weakness, continued pressure from China, and market share gains by competitors in running and lifestyle products remain central concerns.

Jordan, long one of the most important drivers of growth and profitability, has seen product sales weaken. Nike is also struggling to produce new sports and lifestyle hits quickly enough to compete with On Holding, Hoka, New Balance, and Asics. The problem extends beyond one brand and reflects earlier strategic decisions, particularly excessive reliance on models such as Air Force 1 and Dunk and a sharp reduction in sales through external retailers. When Nike removed products from retail shelves, competitors occupied the available space and established a stronger presence.

Nike appointed Elliott Hill as chief executive at the end of 2024 after bringing him back from outside the company. Hill worked at Nike for more than three decades before retiring in 2020 and was viewed as someone with deep knowledge of the organization and its internal culture. The stock jumped following his appointment, but it has since lost roughly half its value, erasing more than $60 billion from Nike market capitalization. His Win Now plan focuses on stabilizing operations, rebuilding retailer relationships, reducing excess inventory, restoring focus on core sports such as running and basketball, and accelerating product development.

Some elements of the turnaround are visible, but they have not produced a sufficiently meaningful change in overall results. Revenue declined 1% in the latest quarter to $11 billion, while Nike Direct weakened 7%, digital sales fell 12%, and company owned store sales declined 7%. Europe and China also continued to weigh on performance, limiting earnings momentum and keeping investors cautious about the pace of recovery.

Wholesale operations improved as revenue from retailers rose 4% to $6.6 billion after Nike renewed and strengthened relationships with Dicks Sporting Goods, Foot Locker, and JD Sports. However, much of this represents the recovery of business Nike previously surrendered rather than the creation of a new growth source. Running also improved, recording five consecutive quarters of double digit growth and adding about $1 billion in revenue during that period. For a company generating more than $45 billion annually, that success is still insufficient to reverse the overall direction.

The deeper challenge is Nike position with consumers. For years, the company turned products designed for professional athletes into fashion and lifestyle items, combining performance, culture, and identity. That formula has become less effective as Hoka, On, New Balance, and Asics transformed running shoes into everyday products offering both comfort and design, while Lululemon, Alo, and Vuori built apparel brands suited to training and life outside the gym. Nike still develops advanced technology and products but is finding it harder to create items that cross beyond sports and become sought after cultural products.

Jordan illustrates the challenge most clearly. Michael Jordan was central to the culture in which the brand grew for millennials, but for Generation Z he is primarily an icon from the past. Nike is reducing the supply of classic models such as Jordan 1 to restore scarcity, even if that means lower sales in the short term. Hill must prove not only that Nike can revive Jordan or increase sales of several existing models, but also that it can create new products that interest younger consumers after competitors have already built their own communities and loyalty.

China remains another major weakness after eight consecutive quarters of declining sales as local brands strengthened and Chinese consumers became more selective. Nike is also dealing with excess inventory, deep discounts, and products that did not always match local preferences. The company is attempting to reset its China operations by changing online and store sales structures and reducing thousands of online distributors. The move carries risk because it could further damage Nike presence and market share in the short term.

Nike has also failed to establish the same position among women that it holds among men. The NikeSKIMS partnership was intended to strengthen the company in this market, but despite initial interest, it has not yet materially changed Nike position against Lululemon or Alo. These weaknesses continue to constrain the prospect of multiple expansion while younger consumer groups move easily between brands, trends, and communities.

Wall Street remains divided, with 16 buy ratings, 24 hold ratings, and four sell ratings. The average price target still indicates significant upside from the current price, but at least 12 research firms have downgraded Nike this year amid concerns that the recovery is taking longer and weakness in the footwear industry is continuing. Institutional flows will depend on whether the next catalysts provide evidence that operational improvements are translating into sustainable growth.

Nike will report earnings in several weeks and hold an investor day in November. The market will want to see not only operational improvement but also a credible path back to growth. Nike has repaired some retailer relationships and reduced earlier mistakes, but the central question remains whether it can again become a brand that sets the direction of the market rather than a large company defending its existing share.

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