Nike Inc. (NYSE: NKE) ended Friday's session at $38.40, its weakest close in about 12 years, as the athletic apparel giant grapples with persistent demand challenges. The decline, which leaves the stock down 48% over the past year, was compounded by an index review that will see the company dropped from the S&P 100 before the market opens on September 21. While Nike remains a member of the broader S&P 500, the removal from the blue-chip benchmark adds a symbolic setback to a company already under pressure.
The index change has limited immediate mechanical impact. The iShares S&P 100 ETF (NYSEARCA: OEF), with roughly $20.45 billion in assets, held 506,524 Nike shares as of Thursday, valued at about $19.6 million. That position represents just 2.5% of Friday's 20.6 million-share trading volume, illustrating the narrow scope of one tracker's forced selling. However, the removal signals a loss of confidence among index providers and could prompt other passive funds to reassess their holdings.
Fresh SEC filings offered a counterpoint to the gloom. Executive Chair Mark Parker received 180,832 stock options with an exercise price of $38.12, set on September 1. The grant is compensation, not a market purchase, as Parker paid nothing upfront and no shares vest immediately. The first 25% will vest in September 2027, with subsequent tranches following annually. At Friday's close, the options held a theoretical intrinsic value of just $50,633 against a total exercise cost of nearly $6.9 million, underscoring how far the stock has fallen.
The real test lies in Nike's operational turnaround, which remains uneven. Fiscal 2026 revenue was $46.4 billion, flat on a reported basis but down 2% in currency-neutral terms. That leaves sales 9.7% below fiscal 2024's $51.4 billion. In the fourth quarter, wholesale revenue rose 4% to $6.6 billion, but Nike Direct fell 7% to $4.1 billion. Digital sales dropped 12%, company-owned stores lost 7%, and Converse revenue sank 32%. These figures highlight structural weaknesses in Nike's direct-to-consumer strategy, which had been a key growth driver.
Margin trends also warrant scrutiny. Reported gross margin jumped 890 basis points to 49.2% in the quarter, but that was largely due to a $986 million tariff recovery. Excluding that benefit, the underlying picture is less rosy. Full-year gross margin improved just 20 basis points to 42.9%, and inventory remained flat at $7.5 billion. Full-year earnings per share fell 3% to $2.10, reflecting the ongoing cost pressures.
At $38.40, Nike trades at 18.3 times fiscal 2026 earnings, a valuation that may appear attractive but is not necessarily a bargain. The annualized dividend of $1.64 yields 4.27%, providing income but not proof of a demand recovery. Analyst targets cluster near the current price: JPMorgan has an Underweight rating with a $40 target, Truist holds at $42, and both RBC Capital and Stifel sit at $45. These cautious outlooks suggest limited upside in the near term.
Investors will look to upcoming catalysts. Nike's annual meeting is scheduled for September 8, where governance and compensation will be on the agenda, but no new sales data will be provided. The next major test comes on October 1, when the company reports fiscal first-quarter results. Direct and digital sales, along with performance in Greater China, will be critical indicators of whether the turnaround is gaining traction.
CEO Elliott Hill acknowledged the challenges in June, citing persistent top-line headwinds but pointing to performance products as a bright spot. However, the mixed channel performance and the S&P 100 exit suggest that Nike's recovery remains a work in progress. The stock's slide to a 12-year low and the index removal add to a narrative of a company in transition, with the market awaiting tangible evidence of stabilization.
