Nike’s Turnaround Is Losing Ground Where It Matters Most

Nike shares were changing hands near $36.22 on Tuesday, September 15, after a brutal slide that has erased most of the stock’s gains from the pandemic era. The damage is not coming from one bad quarter. It is the cumulative bill for a strategy that pushed Nike away from wholesale partners, leaned heavily on mature franchises and underestimated how quickly rivals could occupy the empty space.

The latest figures show why investors remain unconvinced by CEO Elliott Hill’s turnaround. Nike’s fiscal 2026 revenue was $46.4 billion, essentially flat from the prior year, while currency-neutral sales fell 2%. The mix was more revealing: wholesale revenue rose 6% to $27.5 billion, but Nike Direct revenue dropped 6% to $17.7 billion. Digital sales declined 12%.

That is a strategic reversal, not just a soft patch. Nike is rebuilding relationships with retailers after prioritizing its own stores and website, but wholesale growth does not instantly restore shelf space, product excitement or lost consumer traffic. The company has to win back retailers while simultaneously repairing a brand that has become less dominant with younger shoppers.

China is the sharper problem. Greater China revenue fell 11% for the full year on a currency-neutral basis and dropped 17% in the fourth quarter. Local competitors have gained ground, while weaker consumer demand and excess inventory have forced Nike to reset its marketplace. The company’s Converse brand is also shrinking rapidly, with fiscal-year revenue down 31%.

The headline margin improvement offers less comfort than it first appears. Fourth-quarter gross margin jumped to 49.2%, but Nike said an expected $986 million recovery of U.S. tariffs added roughly 900 basis points. That benefit lifted quarterly earnings per share by 52 cents. It does not demonstrate that the underlying business has regained pricing power.

Nike still has financial muscle, including $9 billion in cash and short-term investments at May 31. But patience is thinning. S&P Dow Jones Indices will remove Nike from the S&P 100 before trading begins September 21, another visible marker of its diminished market value.

The next test arrives October 1, when Nike is scheduled to report fiscal 2027 first-quarter results. Investors will be looking for product-led growth, sustained wholesale momentum and cleaner margins, not another accounting-assisted rebound.