Nike (NKE -0.03%) stock jumped 17% in June, according to data from S&P Global Market Intelligence. The market was happy with its latest quarterly update, and investors see a path toward a rebound.
Getting back to growth
Nike has had an awful few years, as its problems have evolved from supply chain issues to inflation to losing an edge in sports. It's cycled through several CEOs as it tries to work itself back up, and it's landed on veteran Elliott Hill, who may finally be making the decisions the company needs to turn around.
Last month, the company reported earnings for the fiscal 2025 fourth quarter, which ended May 31, and although they weren't great, they were better than expected, which usually is enough to generate a thumbs-up from the market. They also demonstrated the kind of progress investors want to see to boost confidence that it can achieve the rebound.
Image source: Nike.
Sales declined 10% year over year in the quarter to $11.1 billion, and earnings per share (EPS) fell from $0.99 last year to $0.14 this year. However, the market was looking for $10.7 billion in revenue and $0.13 in EPS. For a frame of reference, competitor Lululemon Athletica's sales increased 7% year over year in a similar time frame to $2.4 billion and produced $2.60 in EPS.
Hill gave updates about how the company is meeting its previously stated goals of putting the athlete back into the center of its focus in five distinct areas: culture, product, marketing, marketplace, and ground game. The company had lazily relied on its name and franchises to drive sales, as it lost ground to smaller competitors who were out to get the the athlete by innovating and offering excellent products that helped players play better.
Management is diving into sport by creating improved product lines and faster innovation, with a bigger lineup of new launches, and playing into moments through its stellar storytelling capabilities.
There were many key wins throughout another largely dismal quarter. For example, Nike's running sales increased by the mid-single digits in the quarter, and the Vomero 18 has already become a $100 million business in only 90 days on the market.
The sneaker king
The market is excited about Nike because it's already the largest activewear and athletic shoe company in the world by far, with $47 billion in trailing-12-month sales. Investors expect it to bounce back and offer years of growth.
It also pays a growing dividend, making it attractive for long-term passive investors. It may take some time, but Nike could be a real turnaround story.
