Nike (NKE -4.13%) needs to get back to its winning ways. Due to strategic missteps by the prior leadership team, shares have fallen 61% from their record high nearly four years ago (as of Oct. 7). But there's a very clear path to stack the odds in the company's favor when it comes to turning things around.
I predict that this beaten-down consumer discretionary stock will soar over the next five years if it can do this one thing right.
Image source: Nike.
A lack of product freshness has contributed to Nike's struggles
Nike's previous CEO, John Donahoe, made key mistakes that current CEO Elliott Hill is trying to clean up. For instance, Donahoe leaned too heavily on digital channels.
But perhaps the most obvious factor that has been impacting Nike has been a lack of product innovation that has failed to drive excitement from consumers. Revenue in Q1 2026 (ended Aug. 31) was 9% lower than two years before.
If you build it, they will come
It's clear that Nike must once again become a dominant force in product development if the company is to successfully turn things around. Management has altered its strategy to focus on sport-specific innovation, catering to the needs of athletes. At its core, the business needs to introduce fresh in-demand apparel and footwear. And everything trickles down from there.
Better products can lead to more excitement and demand, which supports more revenue. This can lead to greater profits and ultimately a higher stock price in five years.
