Nike (NKE) Shares Plunge 1.49% to 2025 Low Amid Tariffs, Inventory Woes, Rising Competition

Nike Inc. (NKE) shares fell to a 2025 low on Thursday, with the stock trading down 1.74% intraday before closing at a 1.49% decline. The selloff underscores ongoing investor concerns about the company’s ability to navigate a challenging operating environment amid mounting costs, inventory pressures, and evolving consumer preferences.

Rising U.S. tariffs have exacerbated margin pressures, with projected additional costs of $1.5 billion in the current fiscal year compounding existing challenges. These tariffs, combined with a complex global supply chain, have strained Nike’s profitability. Meanwhile, the company’s reliance on deep discounts to clear excess inventory has eroded profit margins, as evidenced by a 30% year-over-year drop in diluted earnings per share. Strategic shifts, such as reducing promotional days in the U.S. digital channel, have struggled to offset declining consumer appetite for full-price purchases in a cost-conscious market.

Broader economic uncertainty has further dampened demand for discretionary items like sportswear. Despite potential tailwinds from the Federal Reserve’s rate-cutting cycle, Nike faces a subdued consumer climate. Data shows a 35% decline in Nike app downloads and an 11% drop in store foot traffic, reflecting waning engagement. Emerging competitors, including trend-driven activewear brands, have intensified competition, capturing market share with innovative offerings and targeted marketing strategies.

Leadership under newly appointed CEO Elliott Hill has prioritized cost-cutting and operational restructuring, including layoffs in the technology division and a shift in wholesale strategies. However, analysts emphasize that these measures remain unproven. The company’s focus on inventory cleanup and retail partner collaboration aims to stabilize margins, but the path to sustained growth remains unclear. Recent efforts, such as a high-profile Super Bowl ad and a partnership with Skims, highlight attempts to reinvigorate the brand, though many view these as incremental rather than transformative.

With shares trading at a 59% discount to their 2021 peak, Nike’s valuation reflects market skepticism about its ability to restore earnings growth. While a normalized P/E ratio of 23 suggests undervaluation, the current P/E of 36.9 indicates lingering doubts. Analysts caution that inventory challenges, including a reported $8 billion stockpile, and evolving retail dynamics will remain critical headwinds. The success of Hill’s turnaround plan hinges on Nike’s capacity to innovate, regain consumer trust, and adapt to a rapidly shifting competitive landscape.