Nike Turnaround Falters As UBS Says There's "No Reason To Buy" Stock
Nike shares fell 3% in premarket trading after the struggling athletic apparel giant warned on its earnings call that revenue declines over the next two quarters will be worse than previously expected, underscoring that there is still no immediate turnaround to halt a multi-year bear market that has driven the stock to decade lows.
"We are not expecting the environment to improve meaningfully over the next six months," Nike's outgoing CFO Matt Friend told investors on Tuesday evening.
Customers are "under pressure around the world, and we can particularly see it having a larger impact on sportswear," Friend added.
Nike now sees sales falling in the low-to-mid single digits, down from an earlier view of a low-single-digit decline. The slowdown is expected over the next six months and is mostly due to slower wholesale shipments in North America, among other factors.
The downbeat commentary offset better-than-expected fourth-quarter sales and profits, which were largely in line with expectations. Management warned that the operating environment became "increasingly challenging" as the quarter progressed, with North America slowing by mid-April.
Our immediate takeaway is that Nike's reset remains ongoing, and any turnaround plan will likely take much longer than initially anticipated, continuing to pressure the stock.
UBS equity analyst Jay Sole, focused on retail, department stores, specialty softlines, apparel, footwear, and consumer discretionary stocks, was blunt with clients: "We don't see a reason to buy the stock."
Sole explained why clients should hold off for now from attempting to bottom-fish the stock, which is currently trading at 2014 levels:
The pivotal Nike question remains "Is all the 'bad news' now priced in?" Despite the pullback in Nike's stock price, we still don't see a good entry point. Nike's stock price is still not cheap at ~27x our FY27 EPS estimate, in our view, and this suggests a solid rebound remains priced in. We continue to see a balanced upside/downside skew. The main upside risk is Nike returns to positive sales growth with expanding gross margin faster than expected. Yet the main downside risk is the rebound takes much longer than the market anticipates. Nike's 4Q report did not cause us to change our thesis much.
Nike's 4Q report underscores upside and downside sales and margin risks:
1. Nike lowered its CY26 sales guidance, but there were bright spots within the outlook. Nike lowered its CY26 sales growth forecast to -L to -MSD% from -LSD %. We believe the main negative factor is Nike's fashion business continues to struggle. The issue is Nike's fashion business remains 50% of its sales mix. Nike may need to take this percentage much lower over time in order to reestablish itself at the world's best sports brand. If so, it could serve as a major, multiyear drag on Nike's top line. This is the main downside sales risk. At the same time, Nike's performance business grew 5% in Q4. Plus, the company sounded like it is in the process of replicating the operational improvements made in categories like running to other sports categories such as basketball, training, outdoor, and tennis. If so, this could lead to upside sales growth surprises over the NTM. This is the main upside risk, in our view.
2. Nike offset its lowered sales expectation with raised margin guidance. Nike boosted its GM% outlook slightly and trimmed its SG&A outlook in order to maintain its CY26 guidance. This was a mild positive surprise to us and Nike is citing its ability to continue to tightly manage costs as one means of restoring its EBIT margin back to 10% over time. However, Nike's average annual SG&A growth rate over the past 4 years (FY27e included) is just 0%. Our concern is Nike is underinvesting in future growth in order to limit near-term downward EPS revisions. Thus, a main downside margin risk is that Nike will have to ramp up SG&A more than expected to return to sustainable top-line growth.
We maintain our FY27, FY28, and FY29 EPS estimates:
We lower our FY27 sales growth forecast given Nike's plan to reduce its inventory buys. Plus, we see greater revenue pressure post Q1 as Nike moves past major sporting events like the world cup and laps elevated promotions on its digital channel. At the same time, we raise our operating margin forecast related to annualizing new efficiencies in Nike's supply chain and technology divisions. Plus we see slightly lower risk Nike's promotions
Separate analyst commentary (courtsey of Bloomberg):
Bloomberg Intelligence analyst Poonam Goyal
- "Nike's sales recovery is likely to take longer as management tightens buys and sell-in to clear sportswear, Jordan, streetwear and China inventory, even as margin can expand sooner"
Citi analyst (neutral, PT to $45 from $47)
- Nike's sales are looking a little weaker, while margins are a little better.
- “After sales slowed in mid-April within 4Q26, June (1QTD) has improved, helped by excitement around global football"
Guggenheim analyst Simeon Siegel (buy, PT $60 from $74)
- The bottom line is that "we assume investors will still question whether Nike has 'ripped the band-aid' on earnings revisions"
- Trim price target on "recognizing ongoing noise and a general reduction in retail multiples"
Jefferies analyst Randal Konik (buy, PT to $75 from $90)
- The fourth-quarter report "came in ahead with kernels of progress solidifying in the base business"
- "Sportswear/Jordan Streetwear still the overhang, but not getting worse"
RBC Capital analyst Piral Dadhania (sector perform, PT $50)
- Revenues remain reliant on wholesale, whilst direct-to- consumer trends remain soft, which is "not likely sustainable mid-term"
- "Nike has delivered a mixed 4Q26 quarter (ex US tariff refund) with anticipated lack of underlying revenue momentum offset by more favourable FX translation benefit which flatters absolute gross profit"
According to Bloomberg data, there are 17 "Buy" ratings on the stock, with 23 "Neutral" ratings and 3 "Sell" ratings.
Read The Market Ear note on Nike's epic demise titled "Go Woke Go Broke: Nike Stopped Obsessing Over Athletes And Started Obsessing Over Activism."
Is France the Best Team at This World Cup or Is It Yet to Be Properly Tested?
Is France the Best Team at This World Cup or Is It Yet to Be Properly Tested?
France has blown opponents away at this tournament, becoming the first team to score three or more goals in five straight World Cup matches.Conor Orr|
EAST RUTHERFORD, N.J. — Truly the stuff of fever dreams over here in section 225 along the stadium’s north side. Pass the man in the tight striped shirt wearing a red beret and holding a fake plastic baguette and you turn the corner to find a pair of men dressed as mimes. They are waving a French flag to fan a young supporter of Les Bleus who has overheated and is slumped down in a chair as security forms a wall around him to cool down.
Around the corner comes Max, an athletically built male of about 5’10” who is dripping sweat beneath what looks like a heavy, non-breathable blonde wig decorated in a kind of braided pigtail. He’s wearing a traditional Swedish dress for Midsommar atop shin guards, soccer socks and tennis shoes. Follow him through the concourse and onto the patio, and you’ve arrived at Camp Sweden.
The fan section of Swedish football—which also cleverly featured fans wearing yellow shirts with the word IKEA written on them—was paltry in size to the overwhelming number of French supporters here among the 83,000 attendants in New Jersey, but for the first 40 minutes, the chants of ‘Allez, Allez, Allez’ (‘Onward Sweden’) did not relent.
Max said Swedish fans took pride in their FIFA ranking for kindness, but when informed that France were heavy favorites, his eyes narrowed and he assumed a joking fighter’s posture. When asked if he believed, as Sweden seemed to escape one piercing attempt on goal after another (including a 19th-minute goal by Kylian Mbappe that was called back upon review) by the blistering French attack over the course of the first 40 minutes, he smiled.
“Of course I do,” he says. “I f—- flew here.”
France and Kylian Mbappé Take Charge
Of course, in rapid succession just before halftime, just after halftime and a third time at the 73rd minute, France eventually honed its eye for the goal and obliterated any chance of a stunning upset. Gone were the scattershot follows, the moments where Les Bleus’ incredible strikers were slapping their heads in frustration.
Kylian Mbappé sliced between two defenders and pounded the ball in the far side of the net. Bradley Barcola slipped between a pair of Swedish defenders, took a quick touch and scored again. Then Mbappé, one last time, punched the ball to the far corner of the net, just off the outstretched hand of Sweden's keeper, Jacob Widell Zetterström. After the last one Mbappé found an open swath of space and skied into the air, a bit like a toddler pretending he was a rocket ship blasting off to the moon.
Outside of the confidence that momentarily reverberated from Camp Sweden, though, the eventual 3-0 result was heavily expected. France became the first team in World Cup history to score three or more goals in five straight matches, though those matches were against some of the Cup’s lowliest opponents: A lukewarm Senegal, Iraq and a second-string Norway, none of which are in the FIFA top 15 World Rankings (Iraq hovers in the mid 60s). Sweden was in organizational tatters leading into the World Cup as well.
WIN FIFA WORLD CUP 2026™ FINAL TICKETS & OTHER PRIZES
Just How Good is This France Team?
It brings up the important question, as France advances to play Paraguay (another team outside of the Top 30 in FIFA World Rankings, though riding high after a stunning upset over Germany in the opening round) in the second stage of the knockout tournament: Are we responsible for believing what our eyes tell us to believe? Or, is it merely another victory over a small, bright-eyed, understaffed army like we saw in Camp Sweden?
“We knew we had to be perfect,” Graham Potter, Sweden’s manager said afterward, noting that, even if Sweden was perfect, it may not have been enough. “We needed a couple of miracles.”
When asked if he thought any team could beat France, he said: “Of course, it’s football, anything is possible, but I haven’t personally seen a better team.”
As Mbappé was subbed off in the 86th minute, France manager Didier Deschamps stretched out his arms and bowed several times, welcoming the 27-year-old star to the bench. Mbappé has now played in 18 World Cup games and has scored 18 goals. He is now the lone record holder, passing Ronaldo and Leonidas, for the most goals ever scored in the knockout stage of the World Cup (10).
What France Does to Opponents
French soccer, at this very moment, is the picture of versatility, with an amoebic attack that is grounded in a concept that is simple theoretically but almost impossible to achieve in real time: Make yourselves fluid enough to empower your goalscorers. France has dominated by mastering width, drawing double teams at both ends of the pitch and thinning out defenses that still cannot manage to bracket the team’s fleet of strikers. Even with quarterly hydration breaks, the tiring effect this has on defenders is debilitating.
They are also appropriately dominant. Before Mbappé’s first goal, he made a backward no-look pass to Ousmane Dembélé that looked more like a dance step (the pair have more mutual assists for one another than any tandem dating back more than 50 years). Every part of his facial expression suggested that he planned for the moment to go viral. France possessed the ball more than 60% of the game and had a shot advantage of 12-3.
Les Bleus appear comfortable enough, then, to sidestep the question of opponent quality. Deschamps admitted that “for us, it wasn’t that difficult” to reach the round of 16 but cautioned a reporter who mentioned the cementing confidence among French fans and journalists.
“Slow down, please,” he said. “There are issues, there’s always room for improvement.”
READ THE LATEST WORLD CUP NEWS, ANALYSIS AND INSIGHT FROM SI FC
Published 2 hours ago | Modified 17 minutes ago
CONOR ORRConor Orr is a Senior Writer for Sports Illustrated with more than 15 years of experience covering the NFL. His work has been cited in Best American Sportswriting and has won a PFWAA award. Prior to Sports Illustrated, he covered both the Giants and Jets for The Star-Ledger. Conor lives in New Jersey with his amazing wife and three children.
Home/Soccer
