Can Nike Finally Bounce Back in 2026?
It was another great year for stocks in 2025, but not everyone joined the party. Several popular companies with heavy consumer exposure, such as NIKE NKE, faced pressure, losing roughly 15% on a YTD basis.
It has been a challenging few-year stretch for NIKE, facing post-pandemic demand issues while also getting its margins hit by recent tariffs. But can 2026 be the bounce-back year? Let’s take a closer look at the current outlook.
Can NIKE Shares Bounce?
NIKE is currently undergoing several key changes with its ‘Win Now’ program, including rebuilding its relationships with retailers and emphasizing a greater focus on its more popular shoes. It’s important to note that NIKE largely cut out retailers to push direct sales over recent years, but the reduction of shelf space backfired considerably, significantly reducing its presence.
The operational turnaround hasn’t yet fully materialized, with sales up a modest 0.6% year-over-year throughout its latest period. As shown below, the company’s year-over-year sales growth rates over recent periods have been well below levels seen across its history.
Image Source: Zacks Investment Research
Following its latest release, Elliott Hill, CEO, said, ‘NIKE is in the middle innings of our comeback. We are making progress in the areas we prioritized first and remain confident in the actions we're taking to drive the long-term growth and profitability of our brands.’
The company’s profitability picture has also been challenged, with its gross margin contracting 300 basis points year-over-year throughout its latest period. Tariffs were behind the crunch, reflecting yet another headwind NIKE has faced. Please note that the chart below tracks margins on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Its current year outlook has also been slashed considerably, with the current $1.56 Zacks Consensus EPS estimate down more than 30% over the last year. Next year’s estimate has fallen 14% over the same timeframe.
Image Source: Zacks Investment Research
Putting Everything Together
Legendary apparel titan NIKE NKE has faced numerous challenges over recent years, with a shift to a more direct-to-consumer approach post-pandemic largely backfiring. The approach also reduced its shelf space across retailers, massively impacting the brand's visibility.
Recent tariffs have also been affecting profitability, reflecting yet another headwind. But the company’s resilience has to be noted, and recent top line performance has been well improved relative to recent periods. While the 0.6% year-over-year revenue growth rate throughout its latest period isn’t impressive, it reflects a considerable improvement compared to the -12% and -9% declines we saw throughout early 2025.
The bearish revision trends still warrant caution. A quarterly release that reveals accelerating sales growth and the easing of tariffs could easily shake the stock out of its recent woes. It's a stock that deserves a very close eye in 2026.
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This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
