Nike (NKE) Stock Slides 3.5% Despite Earnings Beat as China Revenue Plunges 12%

Key Highlights

• Nike surpassed analyst projections with adjusted EPS of 20 cents versus the anticipated 13 cents, while revenue reached $10.97 billion against forecasts of $10.86 billion
• Greater China sales declined 12% to $1.30 billion, despite exceeding analyst projections of $1.24 billion
• Gross margin expanded 8.9%, benefiting from approximately $986 million in tariff refunds following the Supreme Court’s decision to overturn numerous Trump-era global tariffs
• NKE shares dropped approximately 3.5% in Wednesday’s premarket session; the stock has declined roughly 35% year-to-date in 2026
• The company projected “flattish” earnings performance for the initial two quarters of fiscal 2027, anticipating revenue contraction during the first half

Nike delivered fourth-quarter results that exceeded Wall Street’s projections, yet the market response was decidedly negative. Shares tumbled approximately 3.5% in Wednesday’s premarket activity as investors digested a conservative forward outlook and persistent challenges in China that eclipsed the stronger-than-expected quarterly performance.

NIKE, Inc., NKE

The athletic apparel giant posted adjusted earnings per share of 20 cents, significantly surpassing the Wall Street consensus of 13 cents. Total revenue registered at $10.97 billion, exceeding analyst expectations of $10.86 billion.

Gross margin expanded by 8.9% during the period. A significant catalyst: a tariff refund totaling nearly $986 million, stemming from the Supreme Court’s ruling that invalidated numerous global tariffs implemented under President Trump’s administration. This refund boosted earnings per share by 52 cents, though analysts had excluded this figure from their adjusted forecasts. Nike disclosed it had already collected more than $300 million in cash from these claims by the end of the quarter.

Net income reached $1.07 billion, translating to 72 cents per share, representing a substantial increase from $211 million, or 14 cents per share, recorded in the comparable quarter of the previous year.

Greater China Struggles Continue

Revenue from the Greater China region contracted 12% to $1.30 billion. While this figure exceeded Wall Street’s projection of $1.24 billion, the decline highlights the significant challenges Nike faces in recovering momentum within its third-largest geographical market. CEO Elliott Hill expressed the company’s determination to “fully committed to winning” back market share in China, though he conceded that results “aren’t there yet.”

Departing CFO Matt Friend indicated that Greater China revenue would likely continue facing headwinds as Nike collaborates with retail partners to reduce surplus inventory levels. The China market represents approximately 15% of Nike’s total annual revenue.

In North America, Nike’s largest market, revenue increased 3% to $4.83 billion, though this fell marginally short of StreetAccount’s forecast of $4.88 billion.

Sportswear category sales experienced a double-digit percentage decline during the quarter. Friend attributed this softness to the fact that Nike’s consumer base is “under pressure around the world.”

Conservative Guidance Dampens Investor Sentiment

Nike provided guidance indicating “flattish” earnings through the opening two quarters of fiscal 2027, with revenue anticipated to contract during the first half of the year. The company projects gross margin for the first quarter of fiscal 2027 to be marginally positive.

Bernstein analysts observed that “revenue declines through H1 mean no earnings growth until at least H2’27 as Nike prioritizes marketplace health over near-term sales.”

NKE shares have experienced a decline of approximately 35% during 2026. European competitors Adidas and Puma each saw their shares fall more than 1% following Nike’s quarterly disclosure.

On a more positive note, CEO Hill highlighted robust World Cup marketing initiatives, accelerated product introduction timelines, and strengthening demand in the football category. The company intends to introduce over a dozen new footwear designs, though Hill acknowledged that consistent results from these launches will require time to materialize.

Nike also announced an impending CFO transition, with former Pfizer executive David Denton set to succeed Friend effective August 17.

Nike’s forward price-to-earnings multiple currently stands at 21.95, compared to 16.81 for Adidas, according to LSEG data.

The post Nike (NKE) Stock Slides 3.5% Despite Earnings Beat as China Revenue Plunges 12% appeared first on Blockonomi.