Nike (NKE) stock dropped over 3% in Wednesday's premarket trading after the company reported fiscal fourth-quarter (Q4) results showing a 1% year-on-year revenue decline and issued a cautious outlook, signaling that its turnaround under CEO Elliott Hill will take longer than investors had hoped. The revenue decline was driven by a double-digit sales drop in Greater China, which offset modest growth in North America, Nike's largest market. Morningstar analyst David Swartz said the results reflected better cost control and inventory management, but noted that business momentum slowed during the second half of the quarter due to higher fuel costs and the ongoing conflict in the Middle East affecting consumer spending. The company's adjusted earnings per share improved to $0.20 from $0.14 a year earlier, exceeding the analyst consensus estimate of $0.13 per share according to Fiscal AI data, as lower marketing and administrative spending helped trim operating expenses. Hill's 'Win Now' initiative, introduced about 18 months ago, has focused on streamlining operations and improving efficiency, but Morningstar believes these efforts have yet to translate into a meaningful acceleration in financial performance.
Nike Reports Q4 Revenue Decline Driven by China Sales Drop
Nike's Q4 revenue slipped 1% year-on-year. A double-digit sales decline in Greater China offset modest growth in North America, the company's largest market. Lower marketing and administrative spending helped trim operating expenses. Excluding the impact of a tariff-related refund, adjusted earnings per share improved to $0.20 from $0.14 a year earlier, above the analyst consensus estimate of $0.13 per share according to Fiscal AI data.
CEO Hill's Win Now Strategy Focuses on Operational Efficiency
Swartz said Nike CEO Elliott Hill's 'Win Now' initiative, introduced about 18 months ago, has focused on streamlining operations, improving inventory levels and reorganizing teams around sport-focused product development and marketing. Nike said business momentum slowed during the second half of the quarter, citing higher fuel costs and the ongoing conflict in the Middle East as factors affecting consumer spending. Hill added that slower product sales have led to increased discounting, reduced future wholesale orders, and softer consumer spending and lower store traffic.
Morningstar Projects Recovery Visibility in Calendar 2027
Morningstar expects stronger product launches and improving profitability to become more visible during calendar 2027. Analyst Swartz said, 'We think Nike retains its brand advantages in global sportswear, the source of our wide moat rating. Within about three years, we think it will return to mid-single-digit yearly sales growth and midteen EBIT margins.'
Retail Traders Maintain Bullish Sentiment Despite Stock Decline
On Stocktwits, retail sentiment around the stock remained in 'extremely bullish' territory with a 779% jump in message volume in 24 hours. One user said, 'Mark my words, bottom is probably in after tomorrow. Tough to push this stock lower from here. Odds are likely that this stock will double fast. Not sure when but It'll happen fast.' Another user said, 'With all the AI tech bubble trades on the parabolic charts, NKE is a bit refreshing. Tangible branded products that have been around for decades.' NKE stock has declined over 35% year-to-date.
FAQ
What were Nike's Q4 fiscal results?
Nike reported Q4 revenue down 1% year-on-year, with a double-digit sales decline in Greater China offsetting modest growth in North America. Adjusted earnings per share improved to $0.20 from $0.14 a year earlier, exceeding the analyst consensus estimate of $0.13 per share according to Fiscal AI data.
When does Morningstar expect Nike's recovery to become visible?
Morningstar expects stronger product launches and improving profitability to become more visible during calendar 2027. The firm projects Nike will return to mid-single-digit yearly sales growth and midteen EBIT margins within about three years.
What is Nike's current stock performance year-to-date?
NKE stock has declined over 35% year-to-date. The stock dropped over 3% in Wednesday's premarket trading following the Q4 results and cautious outlook.
