April 1 - Nike said on Tuesday that recent geopolitical unrest in the Middle East has added an unexpected obstacle to its broader effort to steady sales and margins, while the company continues to work through sluggish performance in China.
Executives warned that current‑quarter sales will fall sharply and that the pace of the turnaround is slower than the company had hoped. Management attributed pressure on margins in part to higher trade‑related costs, and pointed to more cautious consumer spending as another contributing factor.
The stock reacted violently. Shares plunged 10% to $47.35 in premarket trading on Wednesday, putting Nike on track to open at a level not seen in more than a decade.
On the company’s earnings call, Chief Financial Officer Matthew Friend said the conflict in the Middle East had already altered shopping behavior across parts of Europe, the Middle East and Africa, reducing store traffic and weighing on sportswear sales. That disruption, combined with elevated inventory levels in the EMEA region, has compounded the headwinds facing the business.
Market analyst Josh Gilbert at eToro said the Middle East conflict is intensifying the pressure on the company, noting traffic disruption and higher inventory across EMEA.
Since taking the chief executive role in 2024, Nike CEO Elliott Hill has pursued several strategic moves intended to restore margins and investor confidence. Those measures include tightening promotional activity, concentrating product development on core franchises such as running, and attempting to sharpen innovation. Nike reported that its running category expanded by more than 20% in the quarter, indicating some traction from that strategy.
Even so, analysts cautioned that a meaningful recovery remains a long road. At least eight brokerages trimmed their price targets on the stock following Nike’s update. Oppenheimer analyst Brian Nagel said he is at least somewhat frustrated by the apparently slower-than-planned pace of recovery.
Valuation comparisons offered context for the stock’s trading multiples. Nike’s forward price-to-earnings ratio stood at 25.47, while Adidas’s ratio was 13.54 and Under Armour’s was 25.72, according to LSEG data cited by the company.
Gilbert at eToro summarized the situation saying that Nike is pacing its recovery like a steady jog but keeps encountering new hurdles, and that patience appears necessary for investors.
Investor tools referenced in company materials
Separately, the company’s investor-facing materials included an evaluation prompt asking whether investors should buy NKE, noting that a ProPicks AI tool evaluates NKE alongside thousands of companies each month using more than 100 financial metrics. The material described the tool as assessing fundamentals, momentum and valuation without bias and cited notable past winners that included Super Micro Computer (+185%) and AppLovin (+157%).