Investors who were banking on a quick rebound for Nike (NYSE:NKE) stock this year following 2016's dismal performance have been disappointed so far. The sports apparel titan is trailing the market again as Wall Street worries over the negative effects of e-commerce on the retailing business.

Nike might reduce -- or add to -- those fears when it kicks off its new fiscal year with an earnings report on Sept. 26. Let's look at what investors will be focused on in next week's results.

A jogger stops to drink from a sports bottle.

Image source: Getty Images.

The battle at home

Unlike rival Under Armour (NYSE:UA) (NYSE:UAA), Nike gets a huge proportion of its revenue from markets outside of the United States. However, its home country is still critical to its operating results and so investors will be following trends there as we move toward the winter shopping season.

Weakening growth trends in the U.S. drove Nike's slowing sales and declining profitability last year. That pressure might be ending now that its retailing partners have adjusted their inventory levels to match up with reduced customer traffic trends. Three months ago, the company reported a slight sales increase as gross profit ticked higher.

Don't expect to see a robust expansion coming soon, though, as retailers are still under pressure to cut prices in a highly competitive market. Instead, Nike might post a small contraction over the next few months as it aggressively shifts its focus toward its online retailing channel. CEO Kevin Parker and his team say that this move will ultimately produce both faster sales growth and improved profitability, but it's also likely to hurt short-term results.

Innovation wins

Nike's best defense against pricing pressures is a dynamic product lineup that routinely stays ahead of shoppers' demands. That innovation leadership is even more important while competing brands, including from online rivals, flood the market.

To meet that new challenge Nike is pouring resources into improving every aspect of its innovation process, including by focusing on high-impact upgrades like the latest Air VaporMax platform introduction. In addition, executives are hoping to dramatically shorten the time between design and product launch so that products stay fresh and exciting. "We have a relentless flow of exceptional products and platforms on the way," Parker told investors in late June.

Under Armour is increasing its spending here, too, having just opened a huge new design hub that it claims is its "most significant push in the footwear business to date." There's likely room for both companies to win business through their product innovations. However, investors will be looking for this spending to help bring an end to the profitability slump that's gripped the industry for over a year.

NKE Gross Profit Margin (TTM) Chart

NKE Gross Profit Margin (TTM) data by YCharts.

Updated forecast

Three months ago, Nike's fiscal 2018 forecast called for sales growth that's roughly equal to last year's 8% boost. The U.S. market should contribute to those gains, they said, but will likely be eclipsed by stronger international growth.

Since that projection, Under Armour surprised investors by lowering its own growth outlook to between 9% and 11% from its previous target range of between 11% and 12%. That downgrade was blamed on more weakness in the U.S. segment, which accounts for about 80% of Under Armour's sales -- compared to less than half for Nike.

Still, it will be interesting to see whether Nike follows its rival by lowering growth expectations this week right as we head into the holiday shopping season rush.

Demitrios Kalogeropoulos owns shares of Nike, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool owns shares of and recommends Nike, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool has a disclosure policy.