Stocks

Why Is Nike Stock Down? The S&P 100 Removal Explained

Astron Team · 09/24/2026 · 4 min read

When a well-known stock falls sharply, a single piece of news often shows up trying to explain everything at once. With Nike, the news of the moment was the company's removal from the S&P 100 index, announced by S&P Dow Jones Indices on September 4, 2026, effective September 21. The company remained in the S&P 500 after this change.

The problem is that this index exit alone doesn't explain years of decline in the stock price. According to a Bloomberg Línea report from September 7, 2026, Nike shares were about 78% below their all-time high at the start of that month. The reasons for this go back well before the index announcement, and they show up in the company's own reported results.

Dependence on a few sneaker models

In management's own explanation of the third quarter of fiscal year 2025, Nike acknowledged having relied too heavily on a handful of classic footwear lines — cases like the Air Force 1, the Dunk, and the Air Jordan 1 — and stated it would need to reduce the supply of these models, without discontinuing them, to make room for newer products.

This transition is inherently painful: selling fewer units of an already established sneaker hurts revenue immediately, while a new launch still needs to earn shelf space, generate repeat purchases, and prove it can sustain a similar volume. The investment risk here is clear — the replacement product may draw attention without yet having enough scale to offset the revenue loss from the older models.

Rebuilding without relying on discounts

Nike's own fiscal year 2026 annual report describes two fronts running at the same time: rebuilding distribution in traditional retail (wholesale) and turning the company's digital channel into a full-price sales space, without relying on promotions. Clearing stagnant inventory, in the middle of this process, required discounts and returns in some parts of the business.

Fiscal year 2026 numbers (ended May 31) show this process unevenly:

• Wholesale sales rose 6%.
• Nike Direct sales (own stores and digital) fell 6%.
• Greater China sales fell 11%, amid lower store traffic, heavy promotions, and excess inventory in the region.
• Sales at Converse, the group's brand, fell 31%.

These are reported-value changes, without currency adjustment. The rise in wholesale is a positive sign, but selling more to the retailer is not the same as the retailer selling more to the end consumer — real demand still needs to be confirmed at the point of sale.

Profit fell more than revenue

Fiscal year 2025 results show the scale of the problem: annual revenue fell 10%, but diluted earnings per share fell 42% — four times as much. Gross margin also declined, driven by discounts and costs tied to stagnant inventory. It's like a store selling fewer pairs of sneakers and still cutting prices to clear shelves: rent, staff, and marketing don't fall at the same pace as sales, and the bottom line suffers disproportionately.

In fiscal year 2026, revenue was practically flat, but diluted earnings per share fell again, from $2.16 to $2.10 — a smaller drop than the previous year's, but still far from the earlier level of profitability.

The margin jump that needs context

In the fourth quarter of fiscal year 2026, Nike reported a gross margin of 49.2%, a number that looks impressive at first glance. But about nine percentage points of that total came from the expected recovery of tariffs paid under a specific US trade law (IEEPA), not from selling at higher prices or with more efficiency.

Excluding that one-off effect, the quarter's margin comes to around 40.2% — practically the same as the 40.3% in the same quarter of the previous year. In other words: without the tariff benefit, the quarter's operating profitability was flat, not improved. The tariff recovery helps the accounting result, but it doesn't by itself prove that consumers are buying more sneakers at full price.

What remains after the S&P 100 removal

Exiting an index like the S&P 100 can trigger short-term technical adjustments, since funds that track the index need to sell the removed stock. But, as Nike's own numbers show, the weakening of the business — dependence on old models, the direct channel losing strength, margin propped up by a temporary tariff benefit — had been going on well before the index announcement. Before pinning the whole decline on a single piece of news, it's worth looking at the full series of quarterly results; this is not a buy or sell recommendation for the stock, just an invitation to separate cause from calendar coincidence.