(Bloomberg) -- The pressure is on Nike Inc. this week to show investors it has a plan to boost sales, after its shares posted back-to-back annual losses for the first time since the 1980s and continue to trail both peers and the broader market.

The world’s largest sportswear company has lost more than 40% of its value since a 2021 peak, representing about $130 billion of shareholder wealth. It’s struggling with the same headwinds as other consumer-linked stocks, as shoppers curb their spending in the face of elevated borrowing costs. 

But ahead of Nike’s earnings report Thursday after the market closes, analysts also say Nike needs to roll out new shoes and apparel offerings to revive demand as it competes with the likes of On Holding AG, Adidas AG and Deckers Outdoor Corp.’s Hoka. Its stock is underperforming all those companies this year, and picked up a rare sell rating this past week, from Williams Trading.

“A key catalyst to jumpstart the stock would be proof that Nike is launching innovation sufficient to drive a sales inflection,” Bank of America Corp. analyst Lorraine Hutchinson wrote in a note to clients this week.

The company already warned in December that revenue in the quarter through February, the period covered in Thursday’s announcement, would decline. Wall Street analysts are the least bullish they’ve been on Nike since August, data compiled by Bloomberg show. Williams Trading’s Sam Poser downgraded the stock to sell in the past week, saying the company is “losing its luster.”

In December, Oregon-based Nike announced plans to cut jobs and simplify its product lineup amid weaker sales. It also lowered its revenue growth forecast for its fiscal year ending in May, and said it was at the start of a multiyear product innovation cycle. This month, Nike is rolling out its Air Max Dn sneaker, which it has touted as its “best Air Max product in years.”

“Consumers are getting a little tired of seeing the same thing over and over,” said Cristina Fernández, an analyst at Telsey Advisory Group. “They need something new, and that’s where the innovation comes through to be able to get that consumer to shop.” 

That’s especially true given the global pressure on demand for discretionary goods. Sportswear companies including On, Adidas and Skechers USA Inc. have all disappointed investors with their annual forecasts in the past couple months. On Thursday, retailer Academy Sports and Outdoors Inc. issued a weaker-than-expected sales outlook.

‘Pain Point’

As Fernández sees it, expectations are high for Nike’s product innovation given its position as the industry’s largest player. The running category has been a particular “pain point” for investors, she said, so she’ll be listening for details on Nike’s plan to regain market share. 

Read more: Niche Running Shoes Like Hoka, On Are Trouncing Industry Giants

BofA’s Hutchinson also wants to hear more about Nike’s growth strategies for its Jordan brand and women’s business. This summer’s Olympics Games in Paris are a potential catalyst for product launches, she wrote, but “we are more interested in gauging whether Nike can bring innovation that resonates with the everyday customer.”

In a win in Europe, Nike is replacing Adidas as the main uniform sponsor of Germany’s national football teams as of 2027, the country’s football association said Thursday.

Nike projected in December that revenue would grow about 1% in its fiscal year through May, down from a prior view of growth in the mid-single digits. That would represent the slowest annual growth since the year through May 2010, with the exception of 2020 amid pandemic-era restrictions and supply-chain snafus. Analysts tracked by Bloomberg anticipate a rebound in fiscal 2025, projecting sales will grow about 6%.

At Bernstein, Aneesha Sherman considers Nike undervalued, with shares trading at about 25 times forward earnings, below the five-year average of nearly 32 times.

Still, she sees its sales trends improving more gradually than she had expected at the beginning of the year, due largely to a slower-than-expected rebound in consumer demand for discretionary goods.

“The change in sentiment and confidence in management will take a couple of quarters to build out,” she said. “It’s going to be a slow trajectory.” 

(Updates chart and adds details on German football team pact in 11th paragraph.)

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