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Nike Falls 3% to a Fresh 52-Week Low as China Weakness Overshadows Its Wholesale Rebound
24/7 Wall St. • • business
Key Points:
- Nike shares dropped 3% to a 52-week low of $39.42, down 51% from their 52-week high, amid ongoing challenges in athletic apparel, unresolved issues in China, and skepticism over reported margin improvements.
- Greater China remains a significant problem, with fiscal 2026 sales down 11% and digital sales declining 29%, while EBIT fell 20%, indicating deeper regional weakness beyond currency effects.
- Nike's revenue was flat overall, with wholesale rising 6% but direct and digital sales falling 6% and 12% respectively, highlighting a contraction in higher-margin channels despite a tariff-driven gross margin boost.
- Dividend coverage is a concern, as excluding the tariff recovery gain reduces EPS estimates and results in a payout ratio above 100% in stress scenarios, raising potential risks for dividend sustainability.
- Analyst opinions are mixed, with a wide range of price targets from $40 to $75 and recent downgrades reflecting uncertainty, while peers like Lululemon, Deckers, and On Holding also face declines, though the broader retail sector remains relatively stable.
