Nike's shares are near an 11-year low, having declined over 40% in 2026, as the company faces its eighth consecutive quarter of falling profits. Despite this, Nike is expected to report fourth-quarter earnings on Tuesday after markets close, with analysts anticipating earnings per share to slip from $0.14 to $0.13, and revenue to decline 2% to 4%. This decline is largely attributed to issues in China, where revenue is projected to fall 20% due to reduced wholesale demand and market resetting actions, and lackluster consumer spending in North America, even as North America is expected to see modest growth. Gross margin has fallen 250 basis points through the first three quarters to 41%, and a 25-75 basis point decline is expected in Q4, leading to a 32% drop in earnings per share to $1.38 through the first three quarters.
The company's struggles are compounded by intensifying competition from brands like On Holding and Hoka, poor strategic decisions under former CEO John Donahoe, and a failure to sufficiently innovate. Management has acknowledged that their "comeback is taking longer than we would like." Analysts are largely cautious, with Visible Alpha reporting eight out of eleven analysts having neutral ratings. The consensus EPS target is $0.13, and revenue target is $10.86 billion for Q4.
For the current quarter, management expects revenue to decline 2%-4%. A notable exception in the Q4 results will be a one-time benefit from tariff refunds, which could flatter the headline EPS figure without indicating structural improvements in margins. BofA Securities analyst Lorraine Hutchinson maintained a Neutral rating on Nike with a $55 price target, focusing on commentary regarding North America sell-through and an update on China operations, as stabilizing China is crucial for the company's broader turnaround. Gross margin expansion is not expected until the second quarter of fiscal year 2027 (ending November 2026) as the impact of tariffs rolls off and the benefits of its "Win Now" turnaround plan take hold.
