It's been tough sledding for the iconic sports apparel company Nike (NKE +1.38%), which has seen its stock shed roughly 19% this year and over 57% in the past five years. Retail brands like Nike have been challenged by rising competition in the space, more price-sensitive consumers, and macro challenges, among others.
Nike has also acknowledged strategic mistakes, including an overemphasis on online promotions and a lack of product innovation. Recently, however, Apple's CEO Tim Cook, who has been on Nike's board of directors for about two decades, gave Nike investors 3 million reasons to cheer.
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Tim Cook doubles down on Nike
Securities and Exchange Commission (SEC) filings recently revealed that Cook purchased 50,000 shares of Nike at an average price of $58.97 per share, totaling nearly $3 million. Cook made the purchases on the open market, and the move nearly doubles his stake in the company. According to MarketWatch, these purchases are also Cook's first market buys since 2005, not including equity-based compensation or purchases associated with derivatives.
Insider buys indicate bullishness, and shares jumped after the SEC filings were made public. As the CEO of Apple, Cook possesses keen business acumen and carries more recognition than the typical board member, so it makes sense that his purchases are being received positively. They also come as Nike is attempting a large turnaround plan that has struggled to gain momentum thus far.
Nike recently reported earnings results for the second quarter of fiscal year 2026. The actual earnings results came in strong when the company reported $0.53 earnings per share on revenue of $12.4 billion, both of which came in ahead of Wall Street estimates. However, the stock got crushed after management delivered disappointing guidance, especially as it pertains to its business in China, which is viewed as a key market for the company.
NYSE: NKE
Key Data Points
During the company's earnings call, Nike CFO Matthew Friend told analysts that headwinds in Greater China and challenges with Nike's Converse brand are expected to persist for the remainder of its fiscal year 2026. Tariffs are another headwind impacting the company.
Nike is guiding for revenue in the third fiscal quarter to decline in the low single-digit percentage range, with performance in China and Converse similar to that in the second quarter. Nike's CEO Elliott Hill, who was pulled out of retirement to lead the company toward the end of 2024, described the company's turnaround plan as being in the "middle innings."
Can Nike figure it out?
Nike's turnaround plans involve an intense refocus on athletes, the brand, and product innovation. Under Hill, the company has seen positive traction regarding its new product lines, which is reflected in improved revenue for the North American business. However, the company is also dealing with headwinds outside of its control, due to tariffs.
China is likely the biggest challenge for Nike right now. The company needs to determine how to better connect with consumers in terms of its brand and products, as well as how to most efficiently reach them in China. Nike is making changes in the region, but investors will likely need to see more proof that the strategy is working.
I don't think Nike is necessarily going to rally overnight, and this is likely a position that will require plenty of patience. That said, some very big names like Cook are now showing confidence in the name, and investors can collect a dividend with a nearly 2.75% yield as they wait. Long-term-minded investors can certainly start nibbling on the stock if they're interested.
