It’s hard to overstate how brutal 2025 has been for Nike (NKE) investors.
Shares of the sportswear giant are down more than 43% from their 52-week high and over 26% year-to-date. On Friday, Nike stock closed just above $55 — a level not seen since 2017.
The sell-off is largely a result from President Trump’s sweeping tariffs, which have rattled Nike’s global supply chain and added fresh pressure to a company already struggling with excess inventory and softening demand.
But not everyone is bearish. Analysts at Jefferies are telling investors to buy the dip, and “aggressively” at that.
“Despite the tariff impact, we anticipate a V-shaped recovery in fiscal 2027 and recommend aggressively buying shares at these levels,” Jefferies analysts led by Randal Konik wrote in a recent client note.
Bullish on outlet traffic, inventory progress
Jefferies said a recent visit to a Nike outlet store outside New York City revealed “insane” traffic — a bullish sign for inventory clearance. Foot traffic, they noted, flipped positive in March, up 0.5% after declines of 15.3% in February and 5.2% in January.
“Following last quarter’s EPS call, management highlighted its strategy to leverage the factory channel to clear excess inventory. Our visit today confirms this approach is proving effective,” the note added.
However, the broader market is anything but supportive.
Nike’s annual report shows 50% of its footwear is manufactured in Vietnam, 27% in Indonesia, and 18% in China — all now targeted by Trump’s tariffs.
With levies of 46% on Vietnam, 32% on Indonesia, and 145% on China, Nike’s supply chain has been thrown into disarray.
On the company’s Q3 earnings call in March, CFO Matt Friend warned that Q4 sales would fall on the “low end” of the mid-teens range. Wall Street had expected a smaller drop of 11.4%, according to LSEG consensus estimates.
Gross margin is expected to contract by 4% to 5% as Nike continues liquidating aging inventory that consumers no longer want.
“We are also navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile foreign exchange rates, and tax regulations,” Friend said.
Positive leadership shakeup
Nike’s troubles actually began before the trade war escalated. Last September, then-CEO John Donahoe stepped down after years of declining sales and missed expectations.
He was replaced by Elliot Hill, a Nike veteran who left in 2020 after 32 years at the company.
Hill has already begun shifting Nike’s strategy back toward performance footwear — particularly running — after years of focusing on lifestyle shoes like the Air Force 1.
Jefferies is bullish on the pivot.
“As Nike resumes its innovation flywheel, focusing on running, and improves relationships with retail partners, we expect an increase in allocation to Nike within wholesale,” the analysts wrote.
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