Why These Once-Dominant Consumer Plays Are Losing Their Shine in 2026

The consumer sector has produced legendary wealth for patient investors—think Home Depot or Booking Holdings, where modest initial stakes turned into life-changing returns. Yet not every household name deserves a permanent spot in your portfolio. As markets shift, three devoted followers of these established brands may want to reconsider their positions.

The Athletic Giant That Gave Away Its Game

Nike built an empire on innovation and brand power, dedicating resources to athlete partnerships and performance-driven marketing. But a strategic blunder has haunted the company ever since.

The decision to pivot aggressively toward direct-to-consumer channels and retreat from traditional retail proved costly. By surrendering shelf space, Nike handed competitors like Adidas and Under Armour a golden opportunity to capture market share. Recovery efforts have been slow and incomplete.

The numbers tell the story. In fiscal Q2 2026 (ended Nov. 30), revenue inched up just 1%—a modest improvement from the prior year’s 10% drop, but hardly inspiring. More troubling: net income plummeted 32% to $792 million as costs spiraled faster than sales rebounded. Despite its beaten-down price tag, the stock still commands a P/E multiple of 34, making it expensive relative to its growth prospects and competitive headwinds.

Five-year performance has been a steady drift downward. With mounting competition and unclear recovery signals, this premium valuation looks harder to justify.

The Coffee Shop Facing a Bitter Brew

Starbucks once owned the premium coffee conversation. That dominance has crumbled under mounting pressures.

The post-Schultz era has brought persistent complaints: prices too high, service too slow, store experiences underwhelming. Labor costs have climbed as unionization efforts gained traction, squeezing margins despite dedicated attempts to maintain pricing power. Meanwhile, the U.S. market shows signs of saturation, leaving China as the primary growth frontier—a riskier proposition entirely.

Starbucks brought in Chipotle’s former CEO Brian Niccol to engineer a turnaround. Early results offer mixed signals. Q4 fiscal 2025 (ended Sept. 28) showed revenue growth of 6% year-over-year, reversing the prior year’s decline. Yet this gain masks a deeper problem: expense growth outpaced the revenue increase, and restructuring charges dragged bottom-line results.

Net income collapsed 85% to just $133 million. The forward P/E ratio sits at 37, pointing to a premium valuation that isn’t yet supported by operational momentum. The stock has struggled over five years, and with valuation still elevated and fundamental challenges unresolved, investor patience may be wearing thin.

The Dividend Trap Nobody Expected

Kraft Heinz presents a deceptive offer: a discounted stock price paired with a 6.6% dividend yield. This combination should raise red flags, not excitement.

That generous yield exists because the market doubts the company’s ability to sustain it. The original Berkshire Hathaway-backed merger of Kraft and Heinz was supposed to generate synergies. Instead, it delivered disappointment—even Warren Buffett has acknowledged the strategic failure. The planned separation, now in motion, carries Buffett and successor Greg Abel’s skepticism, a rare public criticism from the typically silent investor.

They may be right. The breakup won’t solve the core issue: consumers increasingly reject processed foods, and private-label alternatives keep eating away at market share. Kraft Heinz slashed its dividend in 2019, signaling financial strain. Another cut remains a genuine risk.

Third-quarter 2025 results underscore the challenge. Net sales declined 3% annually, continuing a trend that started in 2023. The $615 million in earnings only looked respectable because prior-year impairment losses weren’t repeated—not because operations improved. A P/E ratio of 12 might tempt value hunters, but it reflects a deteriorating business, not an undervalued gem.

Years of decline plus uncertain separation prospects make this a Berkshire holding investors should probably skip.

The Larger Lesson

Consumer stocks can deliver outsized returns—but only when fundamentals remain strong. These three have lost their dedicated competitive edges, face structural headwinds, and remain overvalued relative to their prospects. For 2026, the better move might be moving on.