Nike’s stock has fallen as sales weakened, discounts squeezed profits and the company began an expensive repair of its product range and distribution. By early September 2026, shares were roughly 78% below their record high, according to Bloomberg Linea’s September 7 report.
Nike is also being removed from the S&P 100, not the S&P 500. The change is scheduled for September 21, 2026. It doesn’t explain the years of share-price declines that came before it.
Why Has Nike Stock Fallen So Much?
Too Much Dependence on Familiar Shoes
In management’s Q3 fiscal 2025 explanation, Nike acknowledged relying too heavily on a handful of classic footwear lines. It identified Air Force 1, Dunk and Air Jordan 1 as ranges whose supply it needed to reduce, rather than discontinue. Newer products would take time to replace that sales volume.
That creates a difficult transition. Selling less of an established shoe hurts revenue immediately. A new design has to earn demand, reach enough stores and generate repeat orders before it can fill the gap.
The investment risk is that the replacement business grows too slowly. A successful product launch can attract attention without yet being large enough to improve company-wide results.
Rebuilding Sales Without Relying on Discounts
Nike’s fiscal 2026 annual report describes two jobs running alongside each other: rebuilding wholesale distribution and making Nike’s digital business a full-price destination. Clearing old inventory required markdowns and returns in parts of the business.
Picture a customer who has learned to wait for a discount. Removing promotions may improve the price of each sale but reduce the number of orders. Continuing to discount can keep orders coming while making full-price selling harder later.
That is why I wouldn’t interpret every decline in direct sales as proof that the reset has failed. But calling a decline intentional doesn’t make it a success either. The test is whether profitable demand replaces the discounted business.
The figures for fiscal 2026, which ended May 31, show how uneven the recovery remained:
- Wholesale sales rose 6%, while Nike Direct sales fell 6%. Direct includes Nike’s own stores and digital channels.
- Greater China sales fell 11%. Nike reported weaker store traffic, heavy promotions and excess inventory in that market.
- Converse sales fell 31%, adding another business that needed repair.
These are reported dollar changes, before adjusting for currency movements. Wholesale growth is encouraging, but sales to retailers are not the same as retailers selling those products to shoppers.
Profits Took a Much Bigger Hit Than Sales
Nike’s fiscal 2025 results show the scale of the deterioration. Annual revenue fell 10%, while diluted earnings per share fell 42%. Gross margin also declined, with discounts and inventory-related costs among the reasons.
Think of a shop selling fewer pairs of shoes while cutting prices to clear the shelves. Rent, staff and marketing don’t automatically fall at the same rate. A modest sales decline can leave a much larger hole in profit.
In fiscal 2026, annual revenue was broadly flat and diluted earnings per share slipped again, from $2.16 to $2.10. That was a smaller decline, but it wasn’t a return to the earlier level of profitability.
Why the Margin Jump Needs Context
Gross margin is the share of sales left after the cost of the products sold, before expenses such as marketing and administration.
In its fourth-quarter fiscal 2026 results, Nike reported a 49.2% gross margin. That included about nine percentage points from the expected recovery of tariffs paid under the International Emergency Economic Powers Act, or IEEPA.
Nike’s Q4 gross margin
Nike gross margin · quarter ended May 31, 2026
Subtracting that disclosed benefit gives approximately 40.2%, compared with a reported 40.3% a year earlier. This removes one benefit, not tariff costs or every unusual item in either period. It isn’t a fully adjusted comparison.
The tariff recovery improves the financial result. It doesn’t, by itself, establish that customers are buying more shoes at full price.
What Does Leaving the S&P 100 Mean for Nike?
S&P Dow Jones Indices announced the removal on September 4, effective before trading opens on September 21, 2026. Nike remains in the S&P 500 under that announcement.
The S&P 100 is a smaller selection within the S&P 500. It isn’t an automatic ranking where the company in 101st place gets kicked out. The index methodology gives the committee discretion and considers company size, listed options and sector balance.
| Holding | Effect of this announcement |
|---|---|
| A fund tracking the S&P 100 | It needs to adjust its Nike exposure to reflect the deletion. |
| A fund tracking the S&P 500 | This change doesn’t require it to remove Nike. |
| Nike shares directly | The shares aren’t cancelled or delisted because of an index change. |
Rebalancing can create selling pressure, but the announcement is public before the change takes effect. Other traders can position ahead of it, and buyers may absorb the sales. Removal doesn’t guarantee another drop on the effective date.
A fund selling to follow its index isn’t evidence that Nike has just lost another customer or cut its earnings forecast. Those are separate reasons for a trade.
Is Nike Stock Cheap After the Fall?
Being far below an old high doesn’t tell you whether a stock is cheap relative to its earnings prospects.
For a hypothetical company, $5 of annual earnings per share at a price-to-earnings ratio of 30 implies a $150 share price. If earnings fall to $3 and investors pay 20 times earnings, the price falls to $60. That’s a 60% price decline caused by both lower earnings and a lower valuation multiple.
This isn’t a calculation of Nike’s fair value. It explains why the old share price isn’t a target the market owes investors. A recovery depends on what Nike can earn and what investors will pay for those earnings.
A useful check is to value the business with slower improvement than management hopes for. If the investment only makes sense with a rapid return to past profits, it depends heavily on getting that recovery forecast right.
What Would Make Nike’s Recovery More Convincing?
In the next results, check for:
- New products replacing lost classic-shoe sales. Strong growth in one small line isn’t enough. Look for its effect on total footwear revenue and profit.
- Retailers selling through stock and ordering again. Read the discussion of inventory, returns and repeat demand alongside wholesale revenue. Higher shipments alone don’t establish stronger consumer demand.
- Less promotion without continuing to lose customers. Compare full-price selling with traffic and sales trends. A higher selling price needs enough buyers behind it.
- China stabilizing beyond currency effects. Compare unit sales and currency-neutral revenue, not just the reported dollar figure.
- An explanation for better margins. Separate pricing and product costs from tariff recoveries and other unusual items.
These signals can improve before earnings fully recover, and the share price may move earlier still. They help distinguish progress from a convincing presentation; they don’t identify the exact bottom.
I would reconsider a recovery case if Nike cleared old stock but still needed heavy discounts to sell the new ranges. That would weaken the argument that the problem was mainly leftover inventory. The index membership tells us far less about that than the next few quarters of customer demand.
