Nike Inc (NYSE: NKE) has had a turbulent 2024 but the coming year is unlikely to be particularly kind to the world’s largest sportswear brand either, according to Wall Street analysts.
Shares of the footwear and apparel company are on track to closing this year with a more than 25% decline due to a series of strategic errors.
Nike promoted Elliot Hill – an industry veteran to the role of its chief executive, tasked with orchestrating a turnaround in October.
But experts remain convinced that it will take more than a year for the company to meaningfully recover.
How long will it take for Nike to return to growth?
Nike recorded better-than-expected results for its second financial quarter last week that marked the start of its long overdue turnaround, as per Stacey Widlitz of SW Retail Advisors.
Stacey continues to see Nike as a quality name and expects the company to return to growth once it reinvigorates focus on innovation.
“But it’s going to be a long-term, painful process,” she added in a recent interview.
A big mistake that Nike made was trimming its alliance with wholesale partners, including Dick’s Sporting Goods and Foot Locker, in a bid to boost its direct-to-consumer sales, according to Widlitz.
“When you pull back from that channel and withhold some of your best and newest product, someone else comes in and fills those shelves” – and that someone in this case proved to be Hoka and On Running, she argued.
Nike’s store and online sales were down 13% on a year-over-year basis in Q2.
Nike CEO is fully committed to a turnaround
CEO Elliot Hill has already committed to building back trust with the wholesale partners.
“We’ll actively support mutually profitable sell-through. Simply put, we’ll win when our partners win,” he said on the company’s latest earnings call.
He has also disclosed plans of strengthening focus on innovation and sports – a lack of which has meaningfully contributed to Nike losing its mojo, according to experts.
But again, analysts are not entirely convinced that his turnaround plan will help Nike stock fully recover by the end of 2025.
Is Nike stock worth buying for 2025?
Following the earnings call last week, Telsey Advisory downgraded Nike shares to market perform.
Its analysts expect the potential turnaround to “take longer to execute, require greater investments in brand marketing, and result in lower sales and profitability over the next 12 months.”
They now find NKE as fairly valued at about $80 – only slightly above its current price of $77.
Nonetheless, Nike stock pays a dividend yield of 2.09% at writing.
So, its investors do have at least some incentive to wait for the new management to make good on its promise of a significant turnaround.
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