Nike sales fell 4% last quarter and management expects a high-single-digit decline in fiscal 2027. Jordan sales fell 14-16%, Greater China fell 26% y/y, and the digital cleanup will hurt China near term. I am not confident in the turnaround strategy and see no clear turning point; challenges may prevent improvement.

I think the biggest reason everyone is talking about Nike stock right now is the huge drop in sales. In the last quarter, sales fell by 4%, but management expects conditions to worsen during this fiscal year.

Overall, they expect sales to decline by a high single-digit percentage during fiscal year 2027 . This is a company whose sales grew at high single-digit rates between 2010 and 2019, i.e., with a compound annual growth rate of between 7% and 9% during that decade. Now, this company is in decline.

This is a shock to many Nike shareholders and investors who are discussing the reasons for this decline. In the first quarter, the Jordan brand, which is undoubtedly the most well-known brand in Nike's portfolio, represented 13% of its global business, but its revenues declined by average double-digit percentages.

That is, a decrease of between 14% and 16% on an annual basis.

Part of it is due to consumer behavior, part to competition, but part of it is damage that Nike has caused to itself by reducing the quantities of Jordan products available, especially the most popular shoes.

They are trying to create a scarcity of this product, but I don't know if this is really the right strategy . However, they are now facing a sales decline of more than ten percent year-on-year .

Another area where Nike faces significant headwinds is its operations in Greater China. During the last quarter, sales in Greater China fell by 26% year-on-year. They have appointed a new leadership team over the past six months, and are discussing some of the ways they plan to improve their sales in that region.

They said they are ending distribution through channels that do not align with their market pricing strategy, which will reduce the large discounts on their brands.

In other words, Nike says it is ending its relationships with partners who offer significant discounts on its products.

Therefore, Nike believes that having a more rigorous digital system for its flagship products will allow the brand to be presented in a more distinctive way. In the short term, they say revenues and profitability in China will be affected.

They expect the digital cleanup process to take several seasons while they continue to take targeted actions with their partners to improve inventory levels.

Oh my God, this doesn't look good from an investor's point of view. This is an area that is already experiencing a significant drop in sales of 26% year-on-year , and the actions taken by management are not expected to improve the situation for several seasons.

So, Nike is working to improve these setbacks, but as much as management tries to say that it is confident in its strategy for improving the business, I do n't see it that way.

I am not confident in this strategy. I don't think there is enough evidence to suggest that this is the right strategy going forward.

The stock continues to fall further and further while management keeps returning to investors and telling them that this turnaround will take time. It will take longer.

But it's been a long time now. It has been a long time now and Nike is suffering from setbacks in its business without any clear turning point that will push the business towards the better.

I was impressed by their acknowledgment of that, saying that these challenges are significant. And I think it is indeed . I think their challenges are so great that they may not be able to change things for the better.

This situation is turning into a state where there is less confidence that they will eventually find a solution , isn't it? Earlier in this transformation strategy, I thought, you know, Nike: a strong brand, decades of customer loyalty, decades of experience in distribution channels, distribution networks and wholesale partners, and strong relationships with sports franchises such as the NBA, NFL, MLB, football and others, with relationships with the most famous athletes in each sport.

I thought they would be able to exploit that and return it in full force to the client, but they simply couldn't figure out how to do it.