Sneaker giant Nike (NKE -0.71%) has been a disaster over the past few years. Sales have been dropping as it cedes market share to competitors, and increased tariffs have made it challenging to improve profitability. As a result, the stock has plummeted 68% over the past five years, and it's now 21% lower than it was a decade ago.
The company brought in a new CEO last year, and it's making some progress, though management has admitted that conditions might get worse before they get better.
Has Nike finally reached the getting better part? Let's see what some of the updates could be when it reports earnings next week, and whether it makes sense to buy Nike stock right now.
Image source: Nike.
Getting back in the game
Nike is still the premier athleticwear brand, with a wide lead over rivals. But no leader is immune to changing trends, and smaller companies have dug into the open holes where Nike wasn't playing its hardest game. The main culprit seems to be that Nike became too reliant on its top franchises and abandoned innovation in sport.
At the same time, it decided to cut ties with wholesalers to devote resources to its direct-to-consumer business. In hindsight, the fallout from that decision is obvious. Customers didn't see Nike products on wholesale partner shelves in stores like Dick's Sporting Goods and Macy's, and were instead introduced to smaller brands developing excellent products.
Today, Nike has made an about-face in these two areas, restarting wholesale partnerships and investing heavily in innovation. Specifically, it has changed its model and is bringing out new products, addressing the serious athlete at a faster pace.
In the 2026 fiscal third quarter (ended Feb. 28), sales were flat year over year, with a 5% increase in wholesale and a 4% decease in direct-to-consumer. It's still reeling from tariffs, and gross margin fell 1.3 percentage points from last year.
NYSE: NKE
Key Data Points
As for guidance, management is expecting sales to drop 2% to 4% in the fourth quarter and sequential improvement in gross margin, although it is expected to be lower year over year. It anticipates that all activity for its "Win Now" turnaround plan will be completed by the end of the calendar year, and for improvement in the gross margin starting in the fiscal second quarter, when year-over-year comparisons for tariff impact will no longer be relevant.
What could happen on June 30?
Nike is scheduled to provide fourth-quarter results on June 30, and the market is already expecting declining sales. If the report is better than expected, the stock will reflect that. The market will also take into account any changes in forward guidance.
Over the past year, Nike's stock has responded well to earnings only once. It gave up all of its gains with subsequent earnings reports.
That's why you can't time your investment based on one report. If you envision Nike getting back on track, now could be a good time to buy, although the stock is likely to go sideways until there's sustained progress.
