Nike Inc. on Tuesday posted fourth-quarter earning results that were better than what Wall Street had feared.
The early read from Jefferies analyst Randal Konik is that a “bottom” is forming, even though there’s still much work to be done.
“We view North America’s continued momentum and the return to growth in wholesale as early validation of the Sport Offense playbook under [chief executive officer] Elliott Hill,” the Jefferies analyst said. “Greater China and Nike Direct softness remain principal overhangs, but the underlying setup into Fiscal 2027 is incrementally constructive. We are aware it will take time but believe [the] bottom is in.”
Net income for the quarter ended May 31 was $1.07 billion, or 72 cents a diluted share, versus $211 million, or 14 cents, a year ago. The 72 cents includes a 52-cent benefit related to the recovery of IEEPA tariffs. Revenues were down 1.1 percent to $10.97 billion from $11.1 billion in the same year-ago quarter. The company also said gross margin increased 890 basis points to 49.2 percent, mostly due to the expected recovery of IEEPA tariff of $986 million.
Here are the key takeaways from Hill during Nike’s fourth quarter conference call:
Reinforcing the core: Nike is building a much stronger foundation through its Win Now priorities, the CEO said. “As our foundation approves, the sport offense is starting to create impact. Our renewed obsession with sport and the success of our athletes is fueling energy for our brands and building momentum in our performance business, which grew mid single digits this fiscal year,” Hill said.
What the results show: “We know we’re not living up to our full potential, particularly in Nike sportswear and Jordan Streetwear. Sell-through remains challenged, impacting both current discounting and future order books,” Hill said. “We’re operating in a more complex macro environment where we’re seeing added pressure on traffic and discretionary spending across our geographies, but we’re focused on what we can control, bringing each sport together across product, brand, marketplace, and operations, and deepening our connections with athletes, consumers, and partners. When those dimensions connect, they create the Nike multiplier.”
Running boom: The company has delivered five consecutive quarters of double-digit growth in Nike running, adding roughly a billion dollars to its running business.
Wholesale improvement: Nike has been rebuilding its wholesale relationships, expanding outreach, and improving how it shows up across channels. Wholesale revenue grew 4 percent, led by double-digit growth in North America. Significant investments were made in the physical marketplace, refreshing more than 15,000 spaces in wholesale doors around the world.
Digital innovation: “We’re elevating the user experience by leading with performance, celebrating sport moments, and we’re discounting less on Nike Digital,” Hill said.
Experience matters: In fiscal year ’26, Nike elevated more than 150 stores with sport-led experiences over time. The company will continue to rezone and elevate its fleet and close the doors that are no longer aligned to our strategy at our scale. “This takes time. We’re not finished yet,” Hill said.
The sourcing equation: Nike is taking decisive action across its supply chain to lower cost, streamline operations and right-size its distribution network to match the demand ahead. The company has redeployed resources from its Nike Direct technology teams to better support the company across the entire value chain, and its investing in advanced tools and capabilities to improve speed, precision, and reliability in everything it creates, from air manufacturing and materials innovation to how it plans, makes, and moves product to the marketplace.
Changing China: Teams in China are taking a more local approach to product creation and building a territory level offense. Nike is working with partners in evaluating new ways to accelerate its return to growth and in the near term, it is cleaning up inventory.
Converse stumble continues : After another very challenging quarter, the Nike chief said the company now has a firm view of where Converse plays inside Nike Inc. and where it will grow, especially with the Chuck Taylor and Jack Purcell franchises. That refocus includes Shai Gilgeous-Alexander joining the Nike basketball family. “Gilgeous-Alexander and Nike basketball are a perfect match. This move allows Converse to fully focus on serving creators through its lifestyle business,” Hill said.
Nike Investor Day Update: All eyes have been on Nike’s investor day. Amid the company’s CFO change, the event moved from September to Nov. 16 and 17.
Gross margin recovery: Margins are stabilizing. Nike is taking action to tighten buys, reduce future selling and manage inventory. Revenue will moderate but the company will see higher gross margins, beginning in Q1.
New York Knicks championship win: Hill said, “The Knicks reminded all of us of something important. The real story is never just a celebration. The real story is everything it took to get there, and that’s exactly how we’re building Nike the right way, because the goal isn’t one championship, it’s build a team that can do it again and again.”
Nike sportswear and shoes: In fiscal year ’27, the team will introduce more than a dozen footwear styles, all new and not just going back to the vault and doing old retro shoes. “It is leveraging innovation, and you’ll see some newness and freshness coming in new silhouettes,” Hill said.
Nike Vomero: A new Vomero Plus 2 is coming this fall.
Nike’s best product in Q2: The Moon Shoe.
Q2 sell-throughs: After a strong start in March, deceleration in retail sales trends started by mid-April. Currently, there is a bounce back with the World Cup momentum. June is expected to see a halo created by the World Cup.
North America wholesale growth: The business is healthier and is leading Nike’s turnaround. A meaningful amount of that revenue growth was due to lower returns or sales-related reserves and returns, as well as lower discounts and lower cancelations.
