Key Points
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Nike is deliberately cutting supply of the Dunk, Jordan retros, and discounted China online sales, and that is costing it revenue right now.
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If Nike simply gets its operating margin back to its fiscal 2024 level, today’s price looks cheap without any sales growth at all.
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The long-term margin target Nike sets at its Nov. 17 Investor Day is the number that will make or break the decade-long case.
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Nike (NYSE: NKE) has been trading just under $40, or roughly 78% below its intra-day record of $179.10 the consumer discretionary giant set on Nov. 5, 2021. Most of the debate about Nike right now is about the next quarter.
If you’re thinking in decades, I’d argue the better move is to ignore the quarterly scoreboard for a minute and look at what management is actually changing inside the company.
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Nike rebuilt itself around the athlete, and running proves it works
In September 2025, CEO Elliott Hill reorganized Nike, Jordan, and Converse into small cross-functional teams by sport, such as running, basketball, and training, per CNBC. Running is where that shows up first. Nike says it has nearly tripled its share of the max-cushioning category over the past year on the strength of the Vomero, and it rolled out four new running shoes in two months, including the Alphafly 4 marathon shoe and an entry-level racer called the Swooshfly. To me, running is the most honest test of the turnaround. If the sport-by-sport model can win back runners, I see no reason it can’t work in basketball and training, too.
The same playbook was used throughout the World Cup. Hill said Nike doubled its sales of World Cup team kits compared with the 2022 tournament and used the event to refresh how its soccer gear is presented in stores, which lifted sales of club jerseys.
Nike is making its icons scarce again
The most counterintuitive thing Nike is doing is selling less of what made it famous. Revenue from the Dunk fell nearly 50% last quarter by design, and Hill said Nike will cut the volume and frequency of Jordan retro launches because it had been oversupplying them. In China, where revenue fell 26% last quarter, Nike is pulling out of online channels that fueled deep discounting. I’d much rather own a company that chooses to shrink than one forced to do so.
Under the previous strategy, Nike pulled back from many wholesale partners to push sales through its own stores and app. Hill has reversed that. Nike resumed selling directly to Amazon in 2025 for the first time since 2019, and it is rebuilding ties with Dick’s Sporting Goods, which bought Foot Locker in September 2025, per CNBC. Caitlin Clark’s first signature shoe, the Caitlin 1, launched Oct. 1 in 5,000 doors and nearly sold out within hours, including at Foot Locker.
Nike is also chasing women with NikeSKIMS, a new brand built with privately held SKIMS that recently expanded into China and added outerwear. In my view, the women’s business is the biggest growth lever Nike has that isn’t already priced in.
What would change my mind
Hill admitted on the company’s October call that he underappreciated how hard it would be to break the giant Sportswear business into segments built for distinct shoppers.
The stock trades at a price-to-earnings ratio of about 32 based on this year’s adjusted earnings guidance , so investors are paying for a recovery, not a slump. The Pace cost program targets about $2.5 billion in savings through fiscal 2031, and on Nov. 17, management will lay out a five-year financial framework. The line I’ll watch is the operating margin goal: Nike’s earnings before interest and taxes (EBIT) margin was 8.1% last quarter. A dated path back to at least 10% by fiscal 2030 would tell me these moves are working, and I’d buy. Anything less and I’d wait.
None of these moves will show up cleanly in the next quarter, and some will make it look worse. That’s fine with me. I’d build a position in pieces over the next year, adding after the Investor Day if the margin plan clears my bar. Most companies shrink because they have to do so. Nike is shrinking out of choice, and that’s the kind of turnaround I’m willing to wait a decade to see.
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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nike. The Motley Fool has a disclosure policy.
