NIKE Stock Dips 9% in a Month: Is it Time to Buy or Stay Cautious?

NIKE Inc. NKE stock has been in deep trouble in recent months due to tough operating conditions, led by weakness in its lifestyle segment and a decline in digital sales, reflecting shifting consumer preferences. The company is also grappling with lower retail traffic and sell-through rates in Greater China, a key market in its global strategy. These factors have contributed to slower revenue growth and tighter profit margins. Additionally, the NKE stock has been facing headwinds related to the tariff impositions on footwear and other merchandise.These trends have caused the company’s shares to decline as much as 9.2% in the past month, underperforming the Shoes and Retail Apparel industry, the broader sector and the S&P 500 index’s declines of 8.6%, 0.3% and 1.2%, respectively.NIKE's performance is notably weaker than its competitor lululemon athletica inc. LULU, which has lost 5.4% in the past month. NKE has also lagged Birkenstock Holding PLC BIRK and Adidas’ ADDYY growth of 10.5% and 4.6% in the same period, respectively.NIKE’s One-Month Price Performance Image Source: Zacks Investment Research At the current share price of $57.62, NKE trades close to its 52-week low mark of $52.28 reached on April 10. The stock price reflects a 10.2% premium to the company’s recent 52-week low. Meanwhile, the NKE stock’s price reflects a 41.2% discount from its 52-week high of $98.04. NIKE trades below its 50 and 200-day moving averages, indicating a bearish sentiment.NKE Stock Trades Below 50-Day & 200-Day Moving Averages Image Source: Zacks Investment Research Let us explore the reasons behind the company’s dismal movement on the bourses.What Keeps Investors Skeptical About NIKE?Investors are growing increasingly cautious about NKE’s performance as the company grapples with persistent weakness in its core lifestyle segment. Sales of key classic footwear franchises like the Air Force 1, Dunk and Jordan 1 have declined at a faster rate than the overall business, reflecting a broader shift in consumer preferences. Although NKE is working to recalibrate these franchises within NIKE Digital and introduce new designs, the transition has yet to gain enough traction to offset the decline.These strategic adjustments, while necessary for the long term, are creating short-term revenue headwinds, with third-quarter fiscal 2025 sales falling 9% on a reported basis. The continued underperformance of these iconic products raises concerns about NIKE’s ability to stabilize its portfolio and maintain brand momentum.At the same time, NIKE’s Greater China business — once a major growth driver — has become another source of worry. The region saw a 17% year-over-year decline in reported revenues in the third quarter of fiscal 2025, as macroeconomic pressures, intensifying local competition and a heavy promotional environment weighed heavily on the results.Both wholesale and direct-to-consumer channels experienced significant drops, with NIKE Direct falling 11% and Wholesale down 18%. Despite management’s focus on long-term investments in innovation and grassroots sports, the near-term outlook remains challenging, with fiscal fourth-quarter revenues expected to decline more than 22% year over year. These headwinds in China, combined with slowing momentum in NIKE’s core sneaker franchises, have fueled skepticism about the company’s ability to drive sustained growth in the coming quarters.Bleak Outlook Raises DoubtsAdding to NKE’s challenges is a bleak outlook for the fourth quarter of fiscal 2025. The company issued cautious guidance, warning of mid-teen revenue declines — though at the lower end — weighed down by North American shipment timing issues, foreign exchange headwinds, and the expected impacts of new tariffs on imports from China and Mexico.NKE also projects a sharp 400-500-basis-point contraction in the gross margin, driven by prior-year restructuring charges and ongoing margin pressures. Despite efforts to manage costs, SG&A expenses are expected to rise in the low to mid-single digits, straining profitability. External risks, including geopolitical tensions, currency volatility and weakening consumer confidence, are compounding these challenges, reinforcing investor concerns about the company’s near-term growth and earnings trajectory.NKE’s Estimate Revision TrendThe Zacks Consensus Estimate for NKE’s fiscal 2025 EPS moved up by a penny in the last 30 days, while the same for fiscal 2026 EPS moved down 2%.For fiscal 2025, the Zacks Consensus Estimate for NIKE’s revenues and EPS implies year-over-year declines of 10.7% and 45.6%, respectively. For fiscal 2026, the consensus mark for revenues and EPS indicates 1.4% and 9.3% year-over-year decreases, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Image Source: Zacks Investment Research Premium Valuation for NIKE StockNKE is currently trading at a forward 12-month P/E multiple of 29.34X, exceeding the industry average of 22.41X and the S&P 500’s average of 20.51X.At 29.34X P/E, NIKE is trading at a valuation much higher than its competitors. Its competitors, such as lululemon, Birkenstock and Adidas, are delivering solid growth but trade at lower multiples. lululemon, Birkenstock and Adidas have forward 12-month P/E ratios of 17.67X, 24.45X and 25.56X — all significantly lower than NIKE. Image Source: Zacks Investment Research Though NKE is trading much below its five-year high of 48.27X, the current valuation may be considered expensive, given the significant downside risks if the company's ongoing perils are not resolved for a prolonged period.Can NKE’s Fundamental Strengths & Growth Efforts Turn Tables?Despite the ongoing challenges, NIKE remains fundamentally strong, backed by its decisive actions to reposition itself for sustainable and profitable long-term growth. Management is intensifying its focus on the sports category, accelerating the launch of innovations, and strengthening brand storytelling to better align with evolving consumer preferences.Recent product releases like the Pegasus Premium and Vomero 18 have demonstrated the success of this approach, delivering strong early sell-through and reinforcing Nike’s commitment to athlete-informed, functionally-driven design. The company’s emphasis on performance-based innovation — a historical strength — continues to differentiate the brand in a highly competitive market.NKE’s innovation engine is evolving rapidly, bolstered by the rollout of its "Speed Lane" product development model. This initiative, complementing the successful "Express Lane," allows NIKE to respond to consumer trends faster and deliver hyperlocal designs with shorter lead times. The company plans to capitalize on this new model with a series of launches across fitness and lifestyle categories in the second half of fiscal 2025.This system-wide transformation is expected to drive product freshness, support brand relevance and reignite consumer excitement, helping NIKE regain its innovation edge and maintain leadership across key categories.NKE’s strategic shift back toward strengthening its wholesale partnerships marks a significant evolution in its marketplace strategy. After prioritizing direct-to-consumer (DTC) growth, the company emphasizes a more balanced, integrated approach under CEO Elliott Hill’s leadership. The company is rebuilding confidence and expanding its market reach by enhancing collaboration with wholesale partners through joint planning, curated assortments and improved retail storytelling.These initiatives are already showing positive early results, with growth in performance categories like Running and Training nearly offsetting declines in classic footwear franchises — a sign that wholesale re-engagement is beginning to stabilize broader business trends.On the digital front, NIKE is working to reset its NIKE Digital strategy, acknowledging that past reliance on promotions diluted its premium brand image. The focus now is on creating a richer consumer experience, growing organic traffic and emphasizing full-price sales over aggressive discounting. Plans include limiting promotions to key retail periods, elevating brand storytelling online and leveraging NIKE value stores to manage excess inventory more effectively.These efforts are critical to restoring brand strength in the digital space and ensuring that NIKE Digital complements rather than competes with wholesale channels, ultimately supporting healthier, more sustainable growth.Is it Opportune to Buy NIKE Now?NKE’s strategic initiatives build a strong foundation for long-term growth by strengthening its competitive position, expanding its product lineup and deepening consumer engagement. With a focus on innovation, improved retail and digital strategies, and premium brand positioning, NIKE is adapting to the market shifts while maintaining leadership in sports and lifestyle apparel.However, near-term pressures persist as the company navigates product realignment and inventory adjustments. Given its premium valuation and slowing growth, investors should take a cautious approach while monitoring NKE’s efforts to stabilize sales, expand margins and execute its transformation strategies. The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Adidas AG (ADDYY): Free Stock Analysis Report Birkenstock Holding PLC (BIRK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks