Nike reported quarterly sales that marginally exceeded analyst forecasts, a small but visible sign that its move to regain shopper momentum may be making headway. The athletic apparel giant logged fourth-quarter revenue of $10.97 billion, compared with an average analyst estimate of $10.86 billion, according to data compiled by LSEG.
The results arrive amid a broad restructuring of strategy under new chief executive Elliott Hill, who took the helm in 2024. Hill has publicly committed to refocusing Nike on specific sports such as soccer and running and to repairing ties with wholesale retailers that had weakened under the company’s prior emphasis on direct-to-consumer sales.
Despite the revenue beat, investors remain cautious. Nike has been wrestling with elevated inventory levels and an effort to reinvigorate product innovation - pressures that have weighed on profitability during the turnaround process. The company reported fourth-quarter earnings per share of $0.72, a figure that included a $0.52 benefit tied to the expected recovery of import tariffs.
Market reaction was mixed. Nike shares have declined 35% so far this year, though they were trading up roughly 2% in extended hours following the report.
The turnaround effort is unfolding against a more difficult macroeconomic backdrop. The company cited the combined effects of tariffs and the war in Iran as additional headwinds. At the same time, management has invested heavily in marketing ahead of the World Cup to lift revenue and brand visibility and to better compete with global rivals.
Greater China remains a particular area of concern. Nike said sales in the region fell 17% on a constant-currency basis in the quarter - a steeper decline than the 10% drop recorded in the prior quarter, but somewhat less severe than the 20% sales decline the company had forecast in March. Greater China represents 15% of Nike’s annual sales and is its third-largest market after North America and EMEA.
The company is seeking to improve its product assortment in China by reducing selling, but management acknowledged that weaker assortments and share losses to local competitors Anta and Li Ning have dampened performance in recent quarters.
Operationally, clearing older, lifestyle-focused inventory has been a drag on margins as Nike attempts to reset its product mix. At the same time, Hill’s push to rebuild wholesale partnerships and concentrate on high-priority sports is intended to restore long-term growth trajectories, though investors have grown increasingly impatient with the nearly two-year effort.
Key points
- Nike reported fourth-quarter revenue of $10.97 billion versus LSEG’s average estimate of $10.86 billion.
- Management is refocusing on core sports and rebuilding wholesale relationships while investing in World Cup marketing to boost revenue and brand visibility.
- Greater China sales fell 17% on a constant-currency basis; the region accounts for 15% of annual sales and is the company’s third-largest market.
Risks and uncertainties
- Excess inventory and the cost of clearing older lifestyle-focused stock continue to pressure margins - impacting the consumer discretionary and retail sectors.
- Macroeconomic headwinds such as tariffs and geopolitical tensions - specifically the war in Iran - pose ongoing risks to international supply chains and costs for apparel manufacturers.
- Weak product assortments and competitive share losses in Greater China could continue to depress sales in that key market, affecting global revenue performance.