Just because a business has a history of dominating its industry, it doesn't mean that it's always going to be a smooth ride. Nike (NKE 1.97%) provides a clear example of this. The global leader in sportswear has struggled mightily in recent years. And the leadership team is putting its best efforts forward to improve the situation.
The market isn't yet convinced. This consumer discretionary stock is trading 62% below its all-time high (as of Oct. 20), and it has fallen 11% in 2025 after a very volatile year thus far. In the midst of such a massive dip, can Nike shares be a millionaire maker?
Image source: Nike.
Nike's turnaround will take time
Nike is deep in the middle of a major turnaround. Its revenue and net income in fiscal 2025 (ended May 31) were down 10% and 44%, respectively, below the totals from the year before. This has helped drive the stock lower.
Nike's leading priorities are to rebalance its distribution strategy, focusing on wholesale accounts after the business leaned too heavily on its own digital channel. Product innovation must also be improved to drive customer excitement. Nike has altered its playbook, now putting the "athlete back at the center" in a sport-centric approach.
The good news is the company posted a 1% revenue gain in the latest fiscal quarter (Q1 2026, ended Aug. 31). However, this turnaround will take some time. Nike reported a 9% sales dip in China. And its gross margin is under pressure, from a combination of heightened discounting and promotional activity and tariff impacts in North America.
It doesn't seem like Nike's top line growing is the start of a sustainable trend. Management expects revenue to decline low single digits in the current quarter, which includes the early part of the critical holiday shopping period. Wall Street analysts forecast sales to rise 11% between fiscal 2025 and fiscal 2028, which is an encouraging outlook.
Investors can focus on the bigger picture
Every business, no matter how successful it was at one point, will likely go through periods of turmoil. Nike's troubled situation isn't that surprising when you look at the retail and apparel industries. It's extremely difficult to consistently predict what products consumers will gravitate toward, as fashion tastes change all the time. It's also not easy to figure out how aggressively to lean on online channels, especially after the pandemic impacted consumer behavior.
Nike is in an advantageous position because it operates from a position of strength. Yes, some younger rivals are finding remarkable success, but this will always be the case. Nike's powerful brand reigns supreme. And given its long history of dominating the sportswear market, supported by emotional and effective marketing campaigns and high-profile athlete endorsements, Nike should remain on top of consumers' minds.
Nike's brand strength should allow it to continue flexing its pricing power over the long term. This is the sign of a competitively advantaged business.
NYSE: NKE
Key Data Points
This is a risky bet due to high uncertainty
With shares trading 62% off their record, it's clear that the market has become extremely pessimistic. Investors want to see consistent growth when it comes to revenue and earnings. And Nike has seriously disappointed in this regard. It could be some time until things start to improve in a meaningful way.
The stock is cheap, for sure. Investors can add the company to their portfolios for a price-to-sales ratio of 2.2. This is about the cheapest valuation in the past decade, indicating very low expectations. This does add potential upside should the fundamentals strengthen.
Investors willing to take on more risk might like this stock. But it requires a lot of patience. For those looking to become millionaires, though, Nike isn't a good option. The business is mature these days, so it won't register monster growth.
