Nike's earnings and revenue exceeded expectations. Why did the stock price fall?
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Sports retailer Nike's quarterly earnings and revenue exceeded analysts' forecasts, according to Bloomberg data. The world’s largest sportswear manufacturer is trying to win back customers and reassure investors that its efforts to turn the business around are paying off, Reuters reports. However, the company’s sales in Nike’s third-largest market—Greater China—once again fell short in the most recent reporting period, CNBC notes.
Against this backdrop, the retailer's stock plummeted 6% in after-hours trading following the close of the main trading session. Since the start of the year, Nike's stock has fallen by more than 35%.
What Nike reported in its report
— The company’s revenue for the fourth fiscal quarter, which ended on May 31, was $10.97 billion, down 1% from the same quarter last year. However, analysts surveyed by LSEG had expected an even sharper decline and had forecast Nike’s quarterly revenue at $10.86 billion.
— Diluted earnings per share were $0.72. Gross profit for the quarter rose 8.9% year-over-year, largely due to an expected customs duty refund of nearly $986 million after the Supreme Court overturned some of Donald Trump’s tariffs. In the quarter just ended, the expected tariff refund contributed $0.52 to Nike’s earnings per share, according to the report.
— At the same time, the company’s sales in Greater China—Nike’s third-largest market after North America and the EMEA region (Europe, the Middle East, and Africa)—fell by 17% in constant currency for the quarter ended in May. By comparison, Nike itself had forecast in March a 20% year-over-year decline in quarterly revenue in the region. Reuters notes that the retailer’s declining performance in the region over the past few quarters has been driven by a weak product lineup, as well as a loss of market share to local competitors—Anta and Li Ning.
— Nike’s efforts to boost sales “continue to face challenges,” stated Matt Friend, the company’s outgoing chief financial officer, following the release of the financial results. Nike CEO Elliot Hill, in turn, acknowledged the existence of “obstacles” to revenue growth (as quoted by Bloomberg).
What's Happening at the Company
Nike, which used the COVID-19 pandemic to drive an unprecedented digital transformation and boost online sales, has been unable to maintain the ground it gained in 2021 — and is now trading nearly 80% below its all-time high, Barron’s notes. Over the past five years, the stock has lost about 75% of its value, and more than 35% since the beginning of 2026.
Some analysts hope that the new management team will help strengthen the company’s position, the publication notes: CEO Elliot Hill took office in October 2024. He promised to refocus Nike’s product lineup on key sports—soccer and running. He also set a goal of rebuilding relationships with wholesale retailers, many of which were severed as part of former CEO John Donahoe’s transition to a direct-to-consumer sales model. As part of its turnaround, Nike is working to reduce excess inventory and refresh its product lineup. However, progress in turning the business around has been extremely slow, according to Bloomberg.
The company’s attempts to emerge from the crisis have also been hampered by a challenging macroeconomic environment due to Trump’s tariffs and the war in the Middle East, Reuters notes, emphasizing that, against this backdrop, the retailer’s efforts to clear out old inventory of lifestyle goods had a negative impact on the company’s profitability.
Amid a prolonged slump in sales, the sportswear giant has invested heavily in marketing ahead of this year’s World Cup. And while the company has made some progress over the last reporting period, it has also faced setbacks, according to Bloomberg. For example, an advertisement for the Boston Marathon was pulled due to criticism related to discrimination (“Runners Welcome. Walkers Tolerated — read one of the company’s advertising posters); and some of the merchandise released for the World Cup did not reach retail stores by the expected deadlines.
What People Are Saying in the Market
Wall Street analysts are cautious about the retailer’s stock: the majority—22—recommend holding Nike shares in their portfolios. Fifteen advise buying (Buy and Overweight ratings), and only two recommend selling. The average target price for the company’s stock—$54.63 per share—implies an increase of more than 33% from the last closing price.
This article was AI-translated and verified by a human editor
