Bank of America cuts Nike to underperform with the stock at $35.73, down 54% from its 52-week high

Bank of America downgraded Nike to underperform from neutral on Friday, saying it expects sales to decline from the second quarter through the rest of fiscal 2027, CNBC reported. Bloomberg reported that Wall Street's enthusiasm for the stock is at a 25-year low.

The shares were at $35.73 at 2:56 p.m. ET, down 0.7%, according to Nasdaq.com. They touched $35.22 during the day, below the $35.35 low shown in Nasdaq's 52-week range, and are about 54% below the 52-week high of $76.97. About 28.7 million shares had traded, roughly four times the 6.9 million daily average. Nike's market value is about $53 billion.

The earnings number to use is 20 cents, not 72

Nike is expected to report its fiscal first quarter, ended August, on Oct. 1 after the close, according to Nasdaq. The consensus of 12 analysts compiled by Zacks is 44 cents a share, against 49 cents a year earlier.

Last quarter is the reason to read that number carefully. In its fourth-quarter release, Nike reported earnings of 72 cents a share, but 52 cents of that came from the expected recovery of tariffs paid under the International Emergency Economic Powers Act. The $986 million refund lifted gross margin by about 9 percentage points, to 49.2%. Without it, Nike earned about 20 cents a share in the quarter.

So when the first-quarter figure lands, the first question is how much of it is refund. A result near 44 cents with no refund benefit would be a big improvement on the underlying 20 cents. The same number with a large refund inside it would not be.

Where the sales are going

The fourth-quarter release also shows the shape of the business Bank of America is worried about:

• Revenue was $11.0 billion, down 1% reported and 4% in constant currency. Full-year revenue was $46.4 billion, flat.
• Wholesale, sales to other retailers, rose 4% to $6.6 billion, led by North America.
• Nike Direct fell 7% to $4.1 billion, with Nike Brand Digital down 12% and Nike-owned stores down 7%.
• Converse fell 32% to $244 million, with declines in every territory.
• Greater China and EMEA declined; North America grew.

For shoe stores and sporting goods retailers, that split matters. Nike's own website and stores are shrinking while the stores that buy from it are carrying more of its sales. An independent retailer that stocks Nike is now a bigger share of how the brand reaches customers, so a sales decline of the kind Bank of America expects would reach those stores' shelves and orders, not only Nike's own channels.

New faces on the call

This will be the first earnings call for chief financial officer David Denton, who joined from Pfizer on Aug. 17 after Matthew Friend stepped down, according to Nike's June filing. On Sept. 15 the board added Alexandre Arnault, deputy chief executive of LVMH's Moët Hennessy, as a twelfth director, a separate filing shows.

What traders are watching on Oct. 1: the size of any tariff-refund benefit, whether Nike Direct is still falling at a double-digit pace online, China, and whether management gives a view on the rest of fiscal 2027 that answers Bank of America's call for declining sales.

Sources: CNBC; Bloomberg; Nasdaq.com; Nike SEC filings. Ex-refund earnings and percentage figures are Chronicle calculations. This is market information, not investment advice.