Nike reported its fiscal fourth-quarter results, with an earnings per share (EPS) of $0.12, exceeding prior expectations that ranged from $0.07 to $0.15. Revenue for the quarter reached $10.85 billion, outperforming analyst projections of around $10.84 billion. Despite these figures being better than expected, they still represent year-over-year declines in both EPS and sales compared to the $0.14 EPS and $11.1 billion revenue from the year-ago period.
Analyst sentiment ahead of the release was cautious. JPMorgan, for example, cut its price target for Nike to $47 from $52 and trimmed its fiscal 2027 EPS estimate to $1.58 from $1.63, maintaining a Neutral rating. Bank of America (BofA) also maintained a Neutral rating with a $55 price target, anticipating Q4 earnings of $0.11 per share and a 3% sales decline. BofA noted that the Q4 results would include a one-time tariff refund benefit, which was not factored into Nike's initial guidance.
The decline in Nike's Greater China revenue was a significant concern, with BofA modeling a 20% drop in the region's sales for the fourth quarter. The company is actively working to stabilize its operations in China, as an inability to do so could prolong its broader turnaround efforts. North America, however, showed some encouraging signs, with positive growth in the previous quarter, marking the first time all channels grew in two years.
Matthew Friend will step down as CFO, with David Denton, formerly of Pfizer, Lowe's, and CVS Health, joining on August 17th. Friend was still expected to participate in the June 30th earnings call. Management is executing a turnaround plan, focusing on streamlining operations and reducing product complexity, though tariff headwinds and promotional pressures are impacting margins. Nike expects to return to gross margin expansion in the second quarter of fiscal 2027, as the impact of tariffs rolls off and its "Win Now" turnaround plan takes hold.
