Nike Removed from S&P 100 as Turnaround Progress Remains Slow

Nike's recent struggles have led to its removal from the S&P 100 index, effective September 21. The decision is part of quarterly rebalancing, and other companies being removed include Honeywell Aerospace, Simon Property Group, and Colgate-Palmolive.

The S&P 100 is a curated sector that represents blue chip companies across various industries. Nike's inclusion was due to its industry leadership, but its stock price continues to fall, and its industry leadership premium no longer justifies its presence in the index.

According to YCharts data, Nike's revenue and earnings have been down in recent years, with operating margins plummeting from the mid-teens pre-pandemic to under 9% today. The company faces numerous challenges, including supply chain issues, corporate strategy blunders, slowing growth in China, tariffs, domestic consumer spending pressures, and increased competition.

Nike's removal from the S&P 100 could potentially put its seat in the Dow Jones Industrial Average at risk. With just 30 components, the Dow is more exclusive than other major indexes, and Nike is now the lowest-ranked component in the price-weighted index.