It's down 23% this year, is it finally time to buy Nike stock?

Nike (NYSE: Which) By far, it is the largest sportswear company in the world. But it has suffered severe setbacks over the past few years, and its share price reflects that. This year alone it has fallen by 23%, down 67% from its all-time high.

Is this an exciting opportunity to avoid using or struggling with a company?

Nike's brand position as its industry leader is convincing. This is a high-end tag that attracts the audience. Often, this means it can be sold from a wide variety of shoppers, resulting in incredible results and unparalleled brand names. However, this means that when the macroeconomic volatility is volatile, it will also take a bigger hit - it loses mass consumers without some kind of pressure.

Image source: Nike.

Not only is this news bad, but it is expected to get worse. In the third quarter of fiscal 2025 (as of February 28), sales fell 9% from last year, and gross profit margin fell 3.3 percentage points to 41.5%.

Management guided sales to decline in the mid-Q4 quarter, some from adverse currency headwinds, and gross margins narrowed by four to five percentage points. The guide includes the impact of the new tariffs on products from China.

The market has been concerned about other issues about how the tariff plan affects Nike. Since President Donald Trump’s first term and the tariffs that followed, much of its production has been transferred to other Asian countries such as Vietnam. Nike may be in a better position as Vietnam announces it is working with the United States to keep tariffs treated.

The company received a new CEO last year at Elliott Hill, and he seems to have identified and addressed important issues. Hill talked about “Winning with the Sports” and focused on the company’s storytelling. Nike has been losing customers for companies like Hoka, decker'sand Brooks, by Berkshire Hathawayfocusing on performance running the product, and Hill brought it back to Nike. He also focuses on the company's innovative work, and he is determined to launch new products at a rate that attracts fans and invests.

Management noted that even in the third quarter, the performance business in the training and running sectors (Nike’s largest sports sector) increased year by year. CFO Matt Friend attributes it to product innovation and a more sellable price point.

Another area that needs improvement is the wholesale channel. The company made a macro mistake when its long-term relationship with wholesalers cut off its own sales channels. It turns out that customers like to go into stores that sell many brands and pick what they want. Nike's direct sales fell 12% in the quarter, and management expanded its wholesale partnership to attract more customers' attention again. Wholesale channels fell 7% this quarter.

Incredibly, despite all the problems and declines, Nike remains an industry leader. Hill spent some time discussing the Chinese market, where Nike's sales fell 15% in the third quarter. However, it is still the best-selling brand there, just like in the United States and more. Re-clicking on its brand is to make success a more reasonable result from a strength perspective.

Does this mean investors should jump on the trend at this price? Even at such a low Nike stock, Nike stock isn't as cheap as you think. It is 28 at a forward 1-year price-to-earnings ratio (p/e) ratio.

The market may consider Nike's dominance in its field, which is nothing to sneeze. I often point out that Nike sells more than all the other major sportswear companies combined. Most of them are under the pressure Nike has to bear.

Nike is also paying more and more dividends to generate a 2.6% return at its current price, which could attract passive income investors.

I wouldn't say it's an inappropriate opportunity, Nike stock can still be lowered. However, this can be an attractive entry point for long-term investors.

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Jennifer Saibil has no position in any of the stocks mentioned. Motley fool has a place and recommends Berkshire Hathaway, Deckers Outdoor and Nike. Motley Fool has a disclosure policy.

It's down 23% this year, is it finally time to buy Nike stock? Originally published by Motley Fool