Nike has a lot to prove to keep investors in its corner. Here’s where it needs to start
The clock is ticking for Nike to recover. Without any signs of recovery, Jim Cramer said we may have to make a tough decision on the stock soon. “I want to wait until the fall before I cashier [Nike’s stock] “If I see some green shoots, we can buy some more,” Jim said at the March Monthly Meeting on Friday. Jim’s comment comes just ahead of Nike’s critical third-quarter fiscal 2026 earnings report on Tuesday night. This is CEO Elliott Hill’s last chance to show skeptical Wall Street that his “Win Now” initiative is working. Hill has made changes in management since taking over in October 2024. The Nike Mind collection, which was officially launched in January, and the NikeSKIMS sportswear collaboration with Kim Kardashian’s brand, managed to largely clear the backlog of classic inventory and introduced a new product line. New, exciting collections can help increase sales and revitalize the brand. But so far nothing is a win for companies, not even the Supreme Court striking down President Donald Trump’s emergency tariffs last month. Like Nike, whose profits have been slashed by rising import taxes, the vast majority of the declines have occurred since the start of the Iran war on February 28, clouding the outlook for the global economy. At about $51 per share on Monday, the stock is down nearly 35% from its 52-week high of $79.24 in July. the company reported second-quarter results in mid-December In the three months ending in November, Nike’s Greater China segment saw a 17% year-over-year decline in sales, which executives said was one of the biggest reasons the stock fell 10.5% the next day, “I didn’t see what I wanted to see, especially in China,” Jim said at Friday’s Monthly Meeting. Nike’s stock performance over the last 12 months. Indeed, Evercore called China the biggest “swing factor” for the stock in this third-quarter earnings report. Stronger-than-expected Lunar New Year trends for similar brands suggest Nike may have seen a sequential improvement in the region, analysts said in a note to clients Friday. In January, it was announced that Angela Dong, who had been the top executive in China since 2015, would be replaced by Cathy Sparks, who previously led Nike’s Asia Pacific Latin America division. However, Evercore said shares could fall even further in the future if results in China disappoint and suggest it’s too early for management to provide details on its turnaround strategy. “North America has shown positive growth over the last few quarters, so I’d like to see continued positive growth in North America,” Jefferies analyst Randy Konik said in an interview with CNBC on Monday. But so far, Konik said, Nike’s growth in North America has been driven primarily by “sales,” or inventory sold to wholesalers like Dick’s Sporting. That’s why Konik said investors want to understand where Nike stands on “selling,” the term used for retailers selling their inventory to customers. Nike has struggled to repair its relationships with retailers, with revenues falling 9% last quarter and 5% from June to August after predecessor John Donahoe made an aggressive push to sell directly online and in its own stores. Accordingly, Konik said investors want to see if there is “any movement or development” in the DTC business. Konik has a 61% buy rating on its shares, implying more than 100% upside for the shares, according to FactSet data, but the company lowered its price target to a much more modest level on Friday. Our price target is $69 from $77. UBS analysts, who have an equivalent rating on Nike’s shares, said in a note last week that they were wondering about the weight of various macro issues, including impacts from the war in Iran. The most important questions for management include: What percentage of sales are from the Middle East, and what is the impact of rising oil prices on product and logistics costs? Analysts at Goldman Sachs reiterated their buy rating ahead of the quarter on Monday, telling clients they believed “current expectations appropriately reflect near-term fluctuations” in returns. All in all, we’re giving Hill a fair chance to steer the ship in the right direction, especially given that some headwinds, like the war in Iran, are out of his control. “I have confidence in CEO Elliott Hill, and so does the board,” Jim said in response to earnings calls in December, noting insider buying by Nike executives, including Apple CEO Tim Cook. [by then]”Jim Cramer’s Charitable Trust has long been Nike. See here for a full list of stocks.) When you subscribe to the CNBC Investment Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. 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