Nike’s (NKE) fiscal fourth-quarter results were undeniably rough.
Total revenue dropped nearly 12% year-over-year to $11.1 billion, with North America sales plunging about 11%, and Greater China down roughly 20% on a currency-neutral basis.
Yet, the silver lining was that the company managed to outperform expectations: analysts had forecast closer to $10.7 billion in revenues, and shares actually jumped nearly 10% in pre-market trading after the report. The bottom line showed adjusted earnings per share of just $0.14, compared to $1.01 a year ago — a stunning 86% decline.
But the low bar set by investors meant that even modest outperformance was rewarded. CEO Elliott Hill emphasized that this quarter absorbed the brunt of the impact from the “Win Now” strategy, suggesting improving momentum for upcoming periods. As Hill commented on the earnings call, “The progress we made reinforces my confidence that we’re on the right path.” That cautious optimism helped shift sentiment — signaling that the worst may indeed be behind Nike.
But the low bar set by investors meant that even modest outperformance was rewarded. CEO Elliott Hill emphasized that this quarter absorbed the brunt of the impact from the “Win Now” strategy, suggesting improving momentum for upcoming periods. As Hill commented on the earnings call, “The progress we made reinforces my confidence that we’re on the right path.” That cautious optimism helped shift sentiment — signaling that the worst may indeed be behind Nike.
Strategic Reset Underway — But Tariffs Bite
Nike's “Win Now” strategy continues to steer the company toward its athletic roots by doubling down on core segments like running, basketball, training, and performance apparel. However, execution hasn’t come cheap. Gross margins fell by a steep 440 basis points to 40.3% — the drop fueled by deep promotional discounts needed to move excess stock and the fact that Nike is unwinding some of the pandemic-era DTC gains.
Complicating matters further, new U.S. tariffs on Chinese imports are expected to tack on roughly $1 billion in costs this fiscal year, putting further downward pressure on margins. Nike forecast additional margin declines of up to 425 basis points in Q1, with about 100 basis points directly attributable to tariff-related cost pressure. The company is responding by trimming China’s role in its footwear sourcing — shrinking it to about 16% from nearly one-third in 2016 — while shifting production to Southeast Asia and selectively raising retail prices by $5 to $10 on adult footwear lines.
Nike CFO Matthew Friend struck a pragmatic tone, noting that while the “Win Now” plan was painful this quarter, the pace of declines should moderate in coming quarters — provided macroeconomic tones remain stable.
Nike's “Win Now” strategy continues to steer the company toward its athletic roots by doubling down on core segments like running, basketball, training, and performance apparel. However, execution hasn’t come cheap. Gross margins fell by a steep 440 basis points to 40.3% — the drop fueled by deep promotional discounts needed to move excess stock and the fact that Nike is unwinding some of the pandemic-era DTC gains.
Complicating matters further, new U.S. tariffs on Chinese imports are expected to tack on roughly $1 billion in costs this fiscal year, putting further downward pressure on margins. Nike forecast additional margin declines of up to 425 basis points in Q1, with about 100 basis points directly attributable to tariff-related cost pressure. The company is responding by trimming China’s role in its footwear sourcing — shrinking it to about 16% from nearly one-third in 2016 — while shifting production to Southeast Asia and selectively raising retail prices by $5 to $10 on adult footwear lines.
Nike CFO Matthew Friend struck a pragmatic tone, noting that while the “Win Now” plan was painful this quarter, the pace of declines should moderate in coming quarters — provided macroeconomic tones remain stable.
Wholesale Reintegration and Performance Innovation
Nike took a significant step back from wholesale channels in recent years, favoring direct-to-consumer platforms like its own stores and website. That strategy yielded short-term gains but left wholesale partners frustrated and inventory misaligned across traditional retailers. Now, Nike is actively rebuilding those bridges. Executives indicated that restocking efforts are underway with key retailers like Foot Locker, Dick’s Sporting Goods (DKS), Macy’s, and even re-entry into Amazon (AMZN). This shift could help expand distribution and capture holiday spending missed by sportswear upstarts.
On the product front, Nike is leaning hard into performance-led innovation. The launch of new sneakers like the Pegasus Premium and Vomero 18 reflect renewed focus on running — a category where brands like Hoka (DECK) and On Running (ONON) have been making inroads. These design-driven moves may help Nike reclaim market share. The company also teased a delayed collaboration with Kim Kardashian's Skims brand, aimed at strengthening its footprint in women’s apparel — a segment long dominated by competitors like Lululemon and Alo Yoga.
Guidance and Market Reaction
Looking ahead, Nike forecast first-quarter revenue to decline in the mid-single digits — a marked improvement from Q4’s nearly 12% drop and even slightly ahead of Wall Street's projections of a 7% dip. Management stated they would wait before providing full-year guidance, citing uncertainty tied to tariffs and China’s economic performance. Nevertheless, shares rallied roughly 10% in pre-market trading following the earnings call, reflecting investor relief that worst-case scenarios were avoided.
Still, analysts caution that full turnaround won’t happen overnight. Evercore ISI sees Q4 as a potential trough, but warns that ongoing macro challenges could temper the pace of recovery. Morgan Stanley concurs, saying consensus expectations may still be too high but acknowledging that any positive surprises could drive meaningful upside given earnings pessimism.
Conclusion
Nike's fiscal fourth quarter was marked by steep declines in both revenue and margins, pushed by restructuring efforts and external pressures. Yet, management’s clearer messaging on a recovery path, improved guidance for next quarter, strategic product investments, and renewed wholesale engagement signal a turning point. Execution risks remain — particularly around tariffs and China — but if Nike can execute its “Win Now” plan as intended, the hangover from this quarter could lay the foundation for a sustained rebound. Investors will be watching closely to see if the next two quarters bring continued stabilization — as a bottom may be forming, but the climb back has only just begun.
Nike's fiscal fourth quarter was marked by steep declines in both revenue and margins, pushed by restructuring efforts and external pressures. Yet, management’s clearer messaging on a recovery path, improved guidance for next quarter, strategic product investments, and renewed wholesale engagement signal a turning point. Execution risks remain — particularly around tariffs and China — but if Nike can execute its “Win Now” plan as intended, the hangover from this quarter could lay the foundation for a sustained rebound. Investors will be watching closely to see if the next two quarters bring continued stabilization — as a bottom may be forming, but the climb back has only just begun.
Considering a $1,000 investment in these companies?
Our team at Stock Investor carefully curated a list of top stocks with the potential for significant returns, suitable for beginners and seasoned investors alike who are eager to learn a trade and unearth the best stocks to buy. Though not featured in this article, these selected stocks could be game-changers in the future.For those seeking dynamic trading experiences, consider joining our Swing Trade Alerts, Option Income Alert, or our Trading Room. Take advantage of our special offer today, starting at just $1 in the first month.
Unlock the secrets of Smart Money
Explore how billionaires and institutions are influencing the market. Follow their every move with DarkOption Flow and stay updated on essential market insights. Begin your journey to informed investing today!
Education
And if you're a fan of Invest opedia, you'll appreciate what we offer at SharperTrades even more. Explore our comprehensive option trading course and technical trading course, where you can learn trading, analyze stocks, delve into chart patterns for stocks, and gain invaluable insights for making the best company investments.
Unlock Your Stock Market Edge with SharperTrades. Dive into powerful trading tools, learn a trade, and receive expert guidance. Stay up-to-date with regular market updates. Learn trading, basics of investing, and how to pick the best stocks to buy. Whether you're a beginner or seasoned investor and trader, we've got you covered. Get started for free, today!