Nike Inc.’s turnaround might take a bit longer than originally thought.

Needham & Co. analyst Tom Nikic is a long-term bull of nike following changes in the company’s leadership and strategy. He remains confident the moves will reverse Nike’s “flagging” bottom line. But he also said in a note that challenges remain over the near-term.

“Nike still faces headwinds from rationalizing over-supplied product franchises (Jordan, Dunk), brand heat still appears to be lukewarm, and they now have tariffs to contend with as well,” he wrote.

He also noted that many product launches of “scarce” sneaker models, such as retro Jordans and Dunks, are selling slowly, resulting in discounts on secondary-market websites that include StockX and GOAT. Nikic pointed out that when Nike is on top its game, these styles trade at resale premiums.

“As further evidence of Nike’s lack of ‘brand heat’ at the moment, we’ve also seen consistent year-over-year declines in online search trends for the brand, as well as persistent double-digit declines in credit card transactions in the U.S. DTC (direct-to-consumer) channel,” he said.

The analyst also sees gross margin headwinds in the year ahead, notably due to tariff rates, and possibly even channel mix, with wholesale possibly outgrowing DTC and the brand perhaps giving more favorable terms to wholesale partners.

The good news is that Nikic believes that the “worst may nearly be over.” The biggest catalyst change is Nike veteran Elliott Hill becoming CEO. “We also believe that management is clear-headed about the mistakes they’ve made, and are working aggressively to correct them,” he concluded.

Telsey Advisory Group’s (TAG) Cristina Fernández said the athletic brand “seems several quarters away from reaching stabilization in the business, but is making the right moves by cleaning up inventory, rebalancing the product portfolio by increasing newness and reducing the focus on classic franchises, and strengthening relationships with wholesale partners.”

The company is set to report fourth quarter earnings next Thursday after the markets close. Key areas of focus for the earnings conference call will be what progress Nike has made on product innovation, such as what’s in the pipeline and reception to new launches. Also to be discussed is the timing of the NikeSKIMS launch that was originally slated for Spring 2025, which is expected to drive sales growth, Fernández said. Another area of interest is inventory reduction in connection with old inventory and status of rightsizing key lifestyle franchises.

The TAG analyst said expectations are low for the just completed fourth quarter, mostly due to ongoing inventory clearance activity, and in part to unfavorable shipment timing in North America. In addition, gross margins were expected to get impacted from tariffs, currently an additional 10 percent for the reciprocal tariffs for global countries, particularly in Vietnam and Indonesia, with the exception of China, where tariffs are temporarily higher at 30 percent.

At Bank of America Securities, analyst Lorraine Hutchinson is expecting fourth quarter earnings per share of 12 cents, in-line with Wall Street’s consensus expectations, versus EPS of 99 cents a year ago.

“We think 4Q was peak sales and margin pressure as Nike bought back and cleared excess inventory, without sufficient innovation to offset,” Hutchinson wrote in her note.

She noted that Fall 2025 order books are modestly down due to declines in classic footwear franchises, but that meetings with CEO Hill “reaffirmed the point the wholesale partners are excited about Spring 2026 innovation.” The analyst said that while the wholesale environment continues to evolve, “Nike is well-positioned to offset some of the channel headwinds as the brand leans into newer relationships and looks to recapture lost shelf space as other brands retrench from the channel.”

Academy Sports + Outdoors is one of the retailers where Nike is expanding its partnership. Nike’s Jordan brand was rolled out to 145 stores and online in April, showcasing both apparel and footwear across men’s, women’s and kids.

The retailer’s chief merchandising officer Matt McCabe said this month that the chain for the first time cross-merchandised the apparel, footwear and accessories together by gender into a “brands shop concept.” He also said that the initial reaction from customers “has been strong and the brand is tracking ahead of initial sales plans.” The current plan is to launch Jordan in all Academy stores this summer.

Nike has raised prices on select products by $5 to $10 on average, but also noted that the Jordan brand and Nike kids apparel and footwear won’t see any increases.

“We think it was smart to leave kids and footwear priced less than $100 unchanged and think Nike will benefit from its scale and wide pricing architecture if the consumer becomes stretched,” Hutchinson said.

As for its product lines, Nike will be releasing this fall a new lifestyle sneaker called the Astra Ultra exclusively for women. The brand is also bringing back its first Foamposite sneaker. The Nike Air Flightposite in a “Sail” style is slated to hit the sales floor later this month.