Nike reported quarterly earnings and revenue above market expectations on Tuesday (Wednesday AEST), supported by a substantial tariff refund, although the sportswear giant continued to face weak demand in Greater China and warned its turnaround remains a work in progress.
For its fiscal fourth quarter, Nike reported adjusted earnings per share (EPS) of 20 cents, excluding a 52-cent benefit related to the expected recovery of tariffs imposed under the International Emergency Economic Powers Act (IEEPA), ahead of analysts' expectations of 13 cents.
Revenue came in at US$10.97 billion, surpassing consensus estimates of $10.86 billion.
Despite the earnings beat, Nike shares fell 2.5% in after-hours trading.
The company said gross margin improved 8.9% during the quarter, largely due to an expected tariff refund of approximately $986 million after the U.S. Supreme Court struck down many of President Donald Trump's global tariffs.
Executives said on a conference call that Nike had collected more than $300 million in cash related to the tariff refund claims by the end of the quarter.
Net income rose sharply to $1.07 billion, or 72 cents per share, compared with $211 million, or 14 cents per share, a year earlier.
Revenue totalled $10.97 billion, representing a 1% decline from $11.10 billion in the corresponding period last year.
North America, Nike's largest market, delivered a brighter performance, with revenue rising 3% to $4.83 billion.
However, sales in Greater China fell 12% to $1.30 billion amid continued weakness in one of the company's most important long-term growth markets.
President and Chief Executive Officer Elliott Hill said the company had made significant progress in reshaping the business.
"In fiscal 2026, we took decisive actions to strengthen the foundation of NIKE, Inc. and reposition our business for long-term growth," said Elliott Hill, President and Chief Executive Officer, NIKE, Inc.
"We made meaningful structural improvements to lay the groundwork for our Sport Offense across our team culture, innovative product, brand strength, and how we serve consumers in our countries and cities.
"While we continue to face top-line headwinds, we're encouraged by progress in performance product and are focused on consistent execution, improved profitability and scaling our wins to realize our full potential."
Discussing operational improvements, Hill told analysts:
"We have redeployed resources from our Nike Direct technology teams to better support the company end-to-end, across the entire value chain.
"And we’re investing in advanced tools and capabilities to improve speed, precision, and reliability in everything we create from Air Manufacturing and Materials innovation to how we plan, make, and move product to the marketplace.
"At its core, this work is about serving athletes better and creating a more profitable business.
"That’s especially important in Greater China a critical long-term growth market for NIKE where we are fully committed to winning."
However, Hill acknowledged the company has further work to do.
"Overall, the results aren’t there yet. We know we’re not living up to our full potential particularly in Nike Sportswear and Jordan Streetwear, where sell-through remains challenged, impacting both current discounting and the future order books."
Nike reiterated guidance issued last quarter, expecting earnings to remain broadly flat through the first two quarters of fiscal 2027. The company also expects gross margin to be slightly positive in the first quarter of the new financial year.
Hill has been leading a broad turnaround strategy as Nike seeks to reverse several years of declining sales. The company has previously cautioned that its recovery would not be linear as different parts of the business improve at varying speeds.
The restructuring has taken place against a challenging global backdrop marked by tariffs, conflict in the Middle East and ongoing pressure on consumer spending.
Chief Financial Officer Matt Friend told analysts that Nike's customers remain under financial strain globally, particularly affecting sportswear, where sales declined by a double-digit percentage during the quarter.
Nike has also continued to streamline its operations. In April, the company cut approximately 1,400 jobs in its second major workforce reduction of the year.
Last week it announced that former Pfizer executive David Denton will succeed Friend as chief financial officer from 17 August.
The company has nevertheless benefited from heightened global interest generated by this summer's FIFA World Cup in North America.
Although Nike is not an official tournament sponsor, Hill said the company had generated strong engagement through its marketing campaigns.
“What feels different this time around is we’re not treating the tournament as a single moment, we’re using it to reshape our business, telling a connected story over time, engaging different communities in relevant ways and building momentum that carries well beyond the tournament,” Hill said.
Nike shares have fallen 35.6% so far in 2026 and are down approximately 77.1% from their all-time high of $179.10 reached in November 2021.
The stock closed 1% lower at $41.05 on Tuesday, giving the company a market capitalisation of $60.79 billion.
