NIKE (NKE) Stock Forecast & Price Target

Nike's second-quarter operating expenses increased approximately 1% year-over-year, reflecting a significant rise of about 13% in demand creation costs due to elevated brand and sports marketing expenses. Despite this increase, management reported that constant currency sales experienced a 6% growth year-over-year, primarily driven by strong performance in key categories such as running and basketball. North America also showed promising signs with a notable 9% growth, marking a turnaround after four consecutive quarters of declines, supported by a successful wholesale strategy that has bolstered overall revenue.

Nike has experienced a significant YoY decline in revenue, with management reporting a drop of over 20% (approximately $550 million) in the second quarter and guiding for a continued revenue decline in the third quarter, which is below market expectations. The company's margins are under pressure, with North America experiencing a contraction of about 410 basis points YoY due to tariff impacts, as well as declining margins across other regions, including an 850 basis point drop in Greater China attributed to increased markdowns and promotional activity. Furthermore, Nike's strategic reduction in Classics exposure has not yielded positive results, evidenced by a continued decline exceeding 20% YoY, highlighting broader challenges in maintaining market share amidst intensifying competition.