Is the Nike Dividend at Risk? Not Now But Trouble Might Be Brewing

My quick take on Nike (my personal notes):

• Nike is facing major challenges. High inventory levels, declining demand for once-iconic sneaker models, tight competition and difficult market conditions in China are putting pressure on the company.
• The new CEO Elliott Hill is focusing on a realignment strategy to get the company back on track. But it will be seen how long it takes the company to show the first results.
• The next quarter (Q4) will be challenging, probably the worst quarter since the beginning of the COVID-19 pandemic. The company expects a decline in revenues in the mid-teens (!) and further margin compression. So while Q4 will likely be the worst quarter in years, it remains to be seen whether Nike will have bottomed out by the end of that quarter.
• Nike has been paying dividends for 23 consecutive years and has increased its payout every single year. However, by the end of this fiscal year, we are likely to see Nike’s highest payout ratio ever which is a clear sign of growing pressure on its financials. While the dividend is not immediately at risk, the sportswear giant is struggling, and margins are in free fall. If Nike fails to turn things around in the coming quarters, I’d start to question the sustainability of its dividend.

How to use the company sheets

• The company sheets offer a concise, clear overview of key financial metrics, past performance, analyst estimates1, and my personal insights, helping investors quickly grasp the business fundamentals of a given company. Rather than providing an exhaustive 10K-style analysis which can be easily found online, the goal is to highlight only the most relevant factors at any given moment. If the FCF situation isn’t critical right now, I won’t discuss it to ensure that readers can focus on what truly matters for making well-informed investment decisions.
• This document is dynamic and will be updated regularly, typically quarterly following company earnings reports. Subscribers will be informed about updates through my newsletters, Substack chat, or notes but will not receive separate notifications.
• Revenue and earnings growth are shown as percentages to highlight trends and ensure comparability across companies. Stocks often move more on market narratives like AI or cybersecurity than on fundamentals. Furthermore, when growth accelerates, stocks soar; when it slows, sharp corrections follow, regardless of valuation. What matters most is not just growth itself but its momentum, whether it’s strengthening or fading. This explains why value investors often miss top performers, as they focus on undervaluation rather than growth dynamics. For investors, understanding prevailing narratives and shifting growth expectations is key and this is why I put my focus on these aspects.

Symbols

• ⬆️ : growth compared to the previous quarter (QoQ), indicating growth acceleration.
• 🔻: decrease compared to the previous quarter (QoQ), indicating growth compression.

So let’s get into it!

Revenue growth in % (YoY) / growth tendency (QoQ)

2025:

So let’s get into it!

Revenue growth in % (YoY) / growth tendency (QoQ)

2025:

• Q3 ‘25: – 9% YoY / 🔻 QoQNotes:
  • Sales of Nike’s legendary sneakers, such as the Air Force 1, Dunk, and Air Jordan 1, have seen a significant decline, driving footwear revenue down by 12%.

    

  • Market oversaturation has led to limited editions, which once sold out within seconds and were resold at a profit, now staying on shelves much longer. To protect the brand, Nike is aggressively reducing supply of these models but is still producing more than the market can absorb which disastrous effect on earnings (see below).
  • CEO Elliott Hill needs to find a way to bring the train back on track and has announced plans to refocus the product portfolio, with a stronger emphasis on performance products in training and running categories. 👈 From my perspective, this is the most important piece as this strategy pivot will reshape Nike’s product portfolio substantially with a return to Nike’s roots as a performance-focused brand and it will also diversify the company’s overreliance on its classic models, such as Air Force 1, Dunk, and Air Jordan. I will explain further below why this is an uphill battle.