How Good Has Nike (NKE) Stock Actually Been?
Key Points
Nike is the largest athletic apparel company in the world, and it has incredible brand value.
It's facing challenges due to inflation, poor strategy, and intensifying competition.
Nike has a long track record of growing its dividend payouts.
- 10 stocks we like better than Nike ›
Nike (NYSE: NKE) is still the largest athletic wear company in the world, and the largest apparel company of any type in the U.S. However, this retail giant's stock has been a big loser for investors over the past few years.
Nike N7 Collection, Kutoven Stevens. Image source: Nike.
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Headwinds and competition
Nike still has incredible brand value. However, it's been struggling to grow in part due to the inflationary environment. Management made several missteps in recent years, such as reducing and even eliminating some of its wholesale partnerships under a strategy to shift more of its sales to its direct-to-customer channels. It also diluted its premium branding with markdowns in an effort to make more headway with the mass audience that typically flocks to its products.
Management has also admitted that it has relied too much on its popular lines instead of innovating, which left openings for its competitors to grab market share. It's facing tough competition at this point from many smaller brands like Berkshire Hathaway subsidiary Brooks Running and Switzerland-based On Holding.
Nike has responded by appointing a new CEO who is committed to whipping the company back into shape with greater innovation and faster product launches. It made some progress in its fiscal 2026 first quarter (which ended Aug. 31), as revenue was roughly flat year over year after several quarters of significant declines. Its growth came primarily from its wholesale business.
It's still a challenging environment to operate in for any apparel retailer as consumers continue to conserve while inflation remains above the Federal Reserve's target and the economy is in flux.
A losing investment lately
Nike stock has not performed well in recent years, and stacked up against the S&P 500, it looks even worse.
| Stock/Index | 1-year total return | 3-year total return | 5-year total return |
|---|---|---|---|
| Nike | (17)% | (38)% | (50)% |
| S&P 500 | 12% | 72% | 100% |
Data source: Ycharts data as of Nov. 21.
Those returns include Nike's dividend, which yields about 2.6% at the current share price, and which management has raised annually for the past 24 years.
The disparity here highlights how the artificial intelligence (AI) segment of the tech sector is lifting the average for the entire stock market, even at a time when many companies in other industries are feeling major pressure.
Is Nike losing its edge? I don't think so. I also can't predict when its financial fortunes will change in a sustained way. Nike should return to rewarding shareholders in the long term, but the stock may go sideways for a while first.
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Jennifer Saibil has positions in On Holding. The Motley Fool has positions in and recommends Berkshire Hathaway, Nike, and On Holding. The Motley Fool has a disclosure policy.
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