Nike's so-called WinNow strategy was supposed to turn the business. It earned shares of the retailer a downgrade on Tuesday.

J.P. Morgan analyst Matthew Boss downgraded Nike to Underweight from Neutral and lowered his price target to $40 from $47, citing the financial impacts from the company's turnaround strategy as the reason for the bearish view.

Nike stock fell 3% to $41.38 in premarket trading on Tuesday after ending Monday up 2.2%. Shares have declined 33% this year.

Boss, based on the firm's recent "access" to management and by looking at regulatory filings, wrote that the financial impacts of Nike's WinNow strategy made through the end of the current calendar year "will linger" and impact the company's profit and loss statement in the second half of 2027 and into fiscal 2028.

The big one, according to Boss, is Nike's decision to realign its online presence in China.

Nike announced last month that starting in 2027, its digital marketplace in China will be anchored by an official Nike flagship experiences on Tmall, JD.com and Douyin, alongside Nike.com.cn and the Nike App, while partner-operated online storefronts will transition out of selling Nike product.

"On rationale behind the decision -- management is focused on creating digital 'flagship' experiences for the Nike brand to serve as the single elevated destination for Nike within these ecosystems, with clearer product presentation, stronger storytelling and more connected consumer journeys," Boss wrote.

But there's quite a cost.

Boss estimated that Nike will face a $1 billion revenue headwind in China due to this decision.