Nike Stock Jumps as Earnings Beat Expectations
Nike (NKE) stock surged as much as 11% in after-hours trading on Thursday after the sportswear giant posted better-than-expected earnings for its fiscal fourth quarter and projected narrower declines for the next quarter.
Despite a 12% revenue drop in Q4 ending May 31, the results still topped Wall Street expectations. Nike reported $11.1 billion in revenue, slightly above Bloomberg’s forecast of $10.72 billion. Adjusted earnings per share came in at $0.14, beating the estimate of $0.13—though still sharply down from $1.01 in the same period last year.
Tariff Costs Near $1 Billion, But Nike Vows Mitigation
On the Nike earnings call, CFO Matthew Friend warned that newly imposed US tariffs under President Trump pose a major headwind, estimating a $1 billion gross cost impact. The company expects a 100 basis point hit to gross margins from tariffs in the current quarter.
“We intend to fully mitigate the impact of these headwinds over time,” Friend said.
Nike plans to diversify its supply chain, moving more manufacturing away from China. By fiscal 2026, it expects China-made footwear to fall to the high-single-digit percentage range.
Declines in China Market and Wholesale Business
Nike’s China sales fell 20% in Q4, with equipment down 33%, footwear down 20%, and apparel falling 19%. This continues a trend of declining performance in the key market.
Meanwhile, wholesale revenue slipped 9%, hitting $6.4 billion. Nike is now working to rebuild relationships with Dick’s Sporting Goods (DKS) and Macy’s (M) after a prior pivot to a direct-to-consumer strategy.
Product Strategy and Innovations Ahead
To counteract slumping sales and consumer fatigue, Nike plans to launch new products, including:
- Vomero 18
- Jordan Retros
- A’One
- A collaboration with Kim Kardashian
CEO Elliott Hill said Nike remains committed to cleaning up inventory and refreshing its product portfolio.
“While our financial results are in line with our expectations, they are not where we want them to be,” Hill said. “We expect improvement as a result of the progress we’re making.”
Nike Forecast: Smaller Drops, Brighter Horizon?
Looking ahead, Nike expects mid-single-digit sales declines in the current quarter and a gross margin drop of 350–425 basis points—an improvement from last quarter’s 440-point drop.
Analyst Cristina Fernández from Telsey Advisory Group emphasized Nike’s long-term strategy:
“Nike seems several quarters away from stabilization, but is making the right moves.”
With NKE stock down over 34% year-over-year, the Q4 beat and modestly improved forecast triggered optimism on Wall Street.
Source: Yahoo Finance
