$Nike(NKE.US)

Nike: The Turnaround Is Losing Momentum

Nike’s decline is starting to look less like a normal cyclical slowdown and more like a brand problem.

FY2026 revenue was roughly flat at US$46.4 billion, while net income fell 3% to US$3.1 billion. More worrying, Nike Direct revenue dropped 7%. China remains a major drag, with Greater China sales declining for nine consecutive quarters.

The brand is also losing cultural relevance. Kylian Mbappé, one of football’s biggest names, has moved from Nike to On. Losing a global ambassador of that calibre matters because Nike’s competitive advantage has always been more than shoes — it is culture, athletes and brand heat.

Elliott Hill has been cutting costs, simplifying the business and pushing product innovation. But another US$2.5 billion restructuring programme and further job cuts raise the question: is Nike treating the symptoms rather than fixing the underlying problem?

At around US$35, the stock trades at roughly 17x earnings, but that multiple is difficult to call cheap when revenue is still falling. Technically, the shares remain below key moving averages and close to the 52-week low, with RSI around 37.

For shareholders already assigned shares, repeatedly selling covered calls may not be ideal when the stock is depressed. A collar strategy could be worth considering: sell an out-of-the-money call and use the premium to partially fund a protective put. This limits downside while leaving room for a recovery.

Nike doesn’t simply need to cut costs. It needs consumers to want Nike again.