Company Overview
Nike is in the early stages of what could be one of the most watched corporate turnarounds of 2026. The company brought back company veteran Elliott Hill as CEO in October 2025, replacing John Donahoe after years of market share losses to upstarts like On Running and Hoka. Hill spent 32 years at Nike before retiring in 2020, and his return signals a strategic shift back to the company’s roots: athlete storytelling, innovation, and wholesale partnerships.
The turnaround story gained momentum with Q2 FY2026 earnings reported on December 19, 2025, which showed revenue of $12.4 billion (down 8% but better than feared) with gross margins improving to 44.8%. More importantly, Hill outlined his “Create Next” strategy focused on rebuilding wholesale relationships, accelerating innovation cycles, and reinvesting in sports marketing. Recent analyst notes from late January suggest inventory levels are normalizing and Spring 2026 product launches are generating positive buzz, particularly in running and basketball categories.
Key Technical and Fundamental Drivers
New CEO Turnaround → Elliott Hill’s Strategy
Company veteran Elliott Hill took over as CEO in October 2025 with a clear mandate to reverse market share losses, rebuild wholesale partnerships, and refocus on performance innovation and athlete marketing.
Analyst Optimism Growing → Recent Upgrades
Multiple analysts upgraded Nike in late January 2026, citing early evidence that Hill’s turnaround strategy is gaining traction with improving product cycles and channel inventory normalization.
Gross Margin Recovery → 44.8% in Q2
Q2 FY2026 showed gross margins improving to 44.8% as the company clears excess inventory and shifts toward higher-margin innovation products versus commoditized basics.
Spring 2026 Product Cycle → Innovation Return
New running and basketball shoes launching in Spring 2026 are receiving positive early reviews, suggesting Nike’s innovation engine is reaccelerating after years of stagnation.
Valuation Opportunity → Trading at 2019 Levels
Despite being a $150+ billion company with global brand power, Nike trades at similar valuations to 2019, presenting potential upside if turnaround succeeds.
Market Takeaway
Nike represents a classic turnaround play—a dominant brand that lost its way but has the resources and leadership to fix itself. Elliott Hill’s return as CEO isn’t just a personnel change; it’s a philosophical shift back to what made Nike great: authentic athlete partnerships, cutting-edge innovation, and powerful storytelling. The company’s struggles under previous leadership created opportunities for competitors, but Nike still commands unmatched global brand recognition and distribution scale.
The recent analyst optimism in late January suggests Wall Street is starting to believe the turnaround narrative. Early indicators like normalizing inventory, improving gross margins, and positive product reception for Spring 2026 launches support this view. The key question is timing—corporate turnarounds typically take 2-3 years to fully materialize, but the stock often moves well before results appear in financials. With Nike trading at depressed valuations despite $50+ billion in annual revenue and industry-leading margins when firing on all cylinders, the risk-reward could be attractive for patient investors. Traders should watch for Q3 FY2026 earnings (expected in late March) for updated guidance and early evidence that holiday season momentum is building. If Hill can demonstrate even modest improvement in North America—Nike’s most challenged market—it could catalyze a significant re-rating as investors price in a multi-year recovery.