What Is Really Behind Nike Stock's Run?

For questions about this article or underlying research, email help@trefis.com.

Nike (NKE) is deliberately reducing some of its own sales by supplying fewer of its lifestyle shoes, and that strategy may be what Nike bulls are counting on. You probably read falling sales as a sign that shoppers are leaving Nike, but part of that decline is planned. Nike stock returned 17.0% from October 6 to November 4, 2026, though it is still down 31.7% over the past year. Part of the rise came on October 15, when Nike gained 5.2% as buyers moved into beaten-down consumer stocks and away from the AI trade. So how much of Nike's sales fall is its own choice?

Nike Gave Up About $200 Million Of Dunk Sales

Nike reduced revenue from the Dunk, part of its NIKE Sportswear business, by nearly 50% in fiscal Q1 2027 as planned. Management said this cut cost Sportswear roughly $200 million in revenue, compared to a $507 million drop in Nike's total revenue from a year earlier. That single planned reduction accounts for a large part of the quarter's drop.

The Dunk is not the only product facing reductions. Revenue for the Jordan Brand, which made up 13% of Nike's business in the quarter, fell by a mid-teens percentage, a figure management provided to demonstrate the scale of its quarterly cuts. The company also plans to reduce the volume and frequency of specific Jordan Retro launches. In Greater China, where revenue fell 26%, Nike is eliminating distribution through channels that do not fit its strategy.

Not all of the decline was intentional, however. Management said some older, high-volume Sportswear shoes sold below expectations, and noted that shoppers are cautious. So a large part of the quarter's fall is planned, with weak demand on top.

What Does Nike Get For Selling Less?

Management says the cuts will mean less deep discounting of Nike's brands and stronger full-price sales. Nike has not shown that payoff yet. Its quarterly gross margin was 42.8% in fiscal Q1 2027, up from 42.2% in fiscal Q1 2026, but management credited supply chain cost management and currency gains, which were partly offset by more discounting.

Meanwhile, Nike is not finished shrinking. Management expects fiscal 2027 revenue to decline in the high single digits , and expects EBIT, its operating profit, to fall by a greater percentage. Nike stock trades at 19.4 times earnings over the past twelve months, compared to 22.8 for the S&P 500 on the same basis. Both use past earnings, before the fall in profit management expects for fiscal 2027.