Nike Posts Q4 Earnings Above Expectations Amid China Sales Decline
Nike Inc. reported fiscal fourth-quarter earnings of 20 cents per share, exceeding analysts’ expectations of 13 cents, according to a press release. Revenue reached $10.97 billion, surpassing the $10.86 billion forecast, as the company benefited from a $986 million tariff refund linked to a Supreme Court decision. Despite the financial outperformance, shares fell as much as 8% in extended trading, reflecting concerns over sustained demand in key markets.
China Sales Drop 12%, Highlighting Regional Challenges
Nike’s Greater China market, a critical revenue driver, saw sales decline 12% year-over-year to $1.30 billion, below the $1.24 billion analysts had projected. The drop underscores ongoing challenges in the region, where consumer sentiment has been affected by economic headwinds and competitive pressures. “We know we’re not living up to our full potential, particularly in Nike sportswear and Jordan streetwear,” CEO Elliott Hill said during the earnings call, citing weak sell-through rates.
Tariff Refunds Boost Earnings, but Analysts Exclude the Gain
A significant portion of Nike’s adjusted earnings—52 cents per share—stemmed from a tariff refund following the Supreme Court’s ruling to invalidate parts of former President Donald Trump’s global tariffs. However, analysts excluded this gain from their adjusted earnings forecasts, as noted by LSEG. Nike reported gross margin expansion of 8.9% during the quarter, driven by the refund and cost management efforts.
North America Revenue Rises 3%, But Misses Estimates
Nike’s North America division, its largest market, generated $4.83 billion in revenue, a 3% increase from the prior year. However, this fell short of the $4.88 billion analysts had anticipated, according to StreetAccount. The company attributed the gap to softer demand in certain product categories.
Stock Plummets on Profitability Concerns
Despite the earnings beat, Nike’s shares dropped 8% in after-hours trading, reflecting investor skepticism about the company’s ability to sustain momentum. The decline followed a broader trend of volatility in the retail sector, exacerbated by macroeconomic factors such as geopolitical tensions and shifting consumer behavior.
Fiscal 2026 Results Show Mixed Performance
For the full fiscal year 2026, Nike reported net income of $3.11 billion, or $2.10 per share, compared to $3.22 billion, or $2.16 per share, in the previous year. The slowdown in growth, particularly in China, has prompted the company to reevaluate its turnaround strategy. CEO Elliott Hill acknowledged the complexity of the task, stating, “The segments we initially focused on are beginning to see momentum, but the path forward remains nonlinear.”
Guidance Signals Modest Growth in 2027
Nike reiterated its guidance for “flattish” earnings in the first two quarters of fiscal 2027, with gross margins expected to remain slightly positive in the first quarter. The company also highlighted its efforts to adapt to macroeconomic challenges, including rising