Nike Stock Keeps Falling. Time to Buy?

Nike's stock has been on a downward trajectory for the past year, with shares falling 60% from their previous peak. The sportswear giant's recent fiscal fourth quarter 2024 results and guidance for the following quarter have raised concerns among investors, leading to a 21% drop in the stock's value on June 28, 2024. This article explores whether it's time to buy Nike stock or if investors should wait for a turnaround.

Nike's recent struggles can be attributed to several factors, including weakening sales trends, a shift in marketing strategy, increasing competition, and a lack of innovation. The company's sales have been declining, with a year-over-year decrease of 8% in the November-ending quarter and expected full-year sales for the May-ending fiscal year to be down 10% year over year. Nike's earnings are also expected to be down 45% for the current fiscal year. The company's new CEO, Elliott Hill, is implementing a strategy to reduce the reliance on promotional discounts to drive more full-price sales, which may lead to a short-term decrease in sales as customers turn to other brands. Additionally, Nike is facing greater competition in the marketplace, with competitors like Lululemon Athletica, On Holding, and Deckers Outdoor's Hoka delivering stronger sales growth than Nike.



Nike's lack of innovation has also contributed to its recent struggles. The company has been relying too much on selling Dunks, Air Jordan 1s, and Air Force 1s, which are relatively simple retro designs that are easy for the brand to produce and sell at high margins. This lack of innovation has led to a decrease in consumer interest and a shift towards other brands that offer something fresh and new.

Despite these challenges, Nike still maintains a significant lead over its competitors in terms of market share. As of Q3 2024, Nike's market share is 27.22% within the Apparel, Footwear & Accessories Industry, compared to Adidas' 13.41%. In the Consumer Discretionary Sector, Nike's market share is 26.61%, with Adidas being the closest competitor at 13.10%. Nike's global reach and marketing expertise have helped it maintain its dominance in the industry, despite the recent challenges.

Nike has implemented several strategic moves to address its current challenges and improve its financial performance. The company is focusing more on full-price sales and reducing promotional discounts to improve profitability. Nike is also boosting investment in sports, which should benefit its core products like running and basketball shoes. Additionally, the company is focusing on innovation and new product development to stay competitive in the market. Nike's Move to Zero campaign embodies its ambition for zero carbon and zero waste, aiming to create a circular economy by integrating sustainable practices throughout the company.



In conclusion, while Nike's stock has been on a downward trajectory for the past year, the company's recent struggles can be attributed to several factors, including weakening sales trends, a shift in marketing strategy, increasing competition, and a lack of innovation. Despite these challenges, Nike still maintains a significant lead over its competitors in terms of market share. The company has implemented several strategic moves to address its current challenges and improve its financial performance. Investors should closely monitor Nike's progress and consider buying the stock if they believe the company can successfully execute its turnaround strategy. However, it may be wise to wait for more concrete signs of improvement before making a decision.