Top consumer stocks often become some of the best long-term performers in the market. When looking at history, one can see how consumer names such as Home Depot and Booking Holdings often made investors hundreds of thousands or even millions of dollars on relatively small investments.
Unfortunately, such successes do not mean all consumer stocks make good long-term holds. As investors reevaluate their portfolios for 2026, it might be time to part ways with three well-known but struggling consumer stocks.
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1. Nike
Nike (NKE +1.38%) has long succeeded in the highly competitive sports apparel market. Its focus on innovating to improve athletic performance, as well as investments in branding, marketing, and data, helped make it an industry leader.
However, changing consumer tastes and macroeconomic conditions have weighed on the stock. Amid those challenges, rising competition from Adidas, Under Armour, and other emerging brands has also reduced sales.
Additionally, Nike surrendered a key competitive advantage when it moved exclusively to direct-to-consumer (DTC) sales and handed valuable shelf space to competitors. Nike has since worked to reestablish its relationships with retailers, but it has not fully recovered from this misstep.
In the second quarter of fiscal 2026 (ended Nov. 30), revenue was up by only 1%. That improved over fiscal 2025, when revenue dropped by 10%. Also, net income for fiscal Q2 fell 32% to $792 million as expense growth outpaced the increase in revenue.
NYSE: NKE
Key Data Points
With that, Nike stock has steadily slid over the last five years, and despite its lower price, the price-to-earnings (P/E) ratio of 34 shows this is still a relatively expensive stock. Considering the heavy competition it faces and the uncertain prospects for a recovery, it might be time to consider running away from this stock.
2. Starbucks
The highly competitive nature of the coffee market may finally have caught up to Starbucks (SBUX +0.60%). The company has struggled to move on from the leadership of the company's longtime CEO, Howard Schultz.
Increasing complaints about high prices, slow service, and poor in-store experiences have cost it both business and prestige. Also, once-happy employees have unionized in increasing numbers, even as rising labor costs squeeze margins. Moreover, its market appears saturated in the U.S., forcing it to pursue opportunities in riskier markets such as China.
To address those issues, Starbucks hired Chipotle's successful former CEO, Brian Niccol, to turn it around. In the fourth quarter of fiscal 2025 (ended Sept. 28), revenue grew by 6% yearly, an improvement from the last fiscal year when revenue declined.
Still, expenses grew faster than revenue, and one-time restructuring charges also weighed on the bottom line. That led to a net income of just $133 million, an 85% decline from year-ago levels. Not surprisingly, such performance may explain why the stock is down over the last five years.
NASDAQ: SBUX
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Additionally, while a one-time charge skewed its P/E ratio higher to 54, its forward P/E ratio of 37 means its stock still trades at a premium. Given that valuation and the ongoing struggles of Starbucks stock, it may be a good time for investors to seek opportunities elsewhere.
3. Kraft Heinz
Another consumer stock that has struggled is Kraft Heinz (KHC +0.46%). Admittedly, its discounted stock price and 6.6% dividend yield may appear too good to ignore.
Unfortunately, that high yield points to problems rather than an opportunity. The merger of Kraft and Heinz that Warren Buffett's Berkshire Hathaway once advocated has been a failure by Buffett's own admission.
NASDAQ: KHC
Key Data Points
Despite that track record, the planned split of Kraft and Heinz has drawn criticism from Buffett and his successor, Greg Abel, an action Buffett has typically avoided with his holdings.
Buffett may have a point, as the split is unlikely to address core problems, such as rising consumer backlash against processed foods and increased competition from private-label products.
Also, its struggles led to Kraft Heinz slashing its dividend in 2019, and the continuing challenges could bring another dividend cut, putting further pressure on the stock.
In the third quarter of 2025, net sales dropped 3% annually, a trend that has been in place since 2023. Even though it earned $615 million in Q3 2025, that only improved due to the lack of impairment losses that hurt profitability in 2024.
Indeed, one bright spot about its challenges is its P/E ratio of 12, an earnings multiple that could tempt some investors. Still, considering the years of struggles and the uncertain prospects of the upcoming separation, Kraft Heinz is one Buffett holding that investors should probably avoid.
