Nike Revenue Drops, NKE Stock Ends Week 20% Up on Earnings; Worst May Be Over
Nike surpassed fourth-quarter earnings forecasts despite declining revenue and margin issues, which led to an after-hours rise in the...
Quick overview
- Nike's fourth-quarter earnings of $0.14 per share exceeded Wall Street expectations, despite a 12% year-over-year revenue decline to $11.1 billion.
- The company's gross margin contracted by 440 basis points to 40.3%, primarily due to increased discounts and inventory management efforts.
- Shares surged nearly 11% in after-hours trading, reflecting investor optimism about the earnings beat and potential recovery signs.
- Management remains cautious about ongoing margin pressures but is focused on strategic initiatives to restore growth and profitability.
Nike surpassed fourth-quarter earnings forecasts despite declining revenue and margin issues, which led to an after-hours rise in the company’s stock.
Nike Q4 Snapshot: EPS Surprises, Revenue Slides
Nike Inc. (NYSE: NKE) posted fourth-quarter results that were better than feared, sparking a strong rally in after-hours trading. The sportswear giant delivered earnings of $0.14 per share, well above Wall Street estimates, even as revenue dropped 12% year-over-year to $11.1 billion.
Despite the drop in topline sales, Nike demonstrated disciplined cost management, which helped cushion the blow from weak volumes and heavy promotional activity. The company’s gross margin contracted by 440 basis points to 40.3%, largely due to larger-than-usual discounts, as it worked to reduce inventory and reposition its brand mix.
Share Price Reaction: From Modest Gains to After-Hours Surge
Nike shares ended the regular session up 2.81% at $62.55, after opening at $61.70. However, the stock shot up to $69.62 in after-hours trading—a jump of nearly 11%—suggesting strong investor enthusiasm about the earnings beat and signs that the worst of the financial pressure may have passed.
This move sets the stage for a likely bullish gap-up at the next session’s open, but the NKE stock should push above moving averages which have been acting as resistance levels. If that happens, then we might hope for a trend reversal because sellers have been prevailing since 2021.
Nike Tops EPS Forecast Despite 12% Sales Decline; Cautious FY26 Outlook Weighs on Margins
Nike Q4 FY2025 Financial Summary – Key Takeaways
- Revenue came in at $11.1 billion, reflecting a 12% year-over-year drop, but still beat market expectations by 3.74%.
- Earnings per share (EPS) landed at $0.14, outperforming consensus estimates by 16.67%, a result of tighter cost controls.
- Gross margins shrank by 440 basis points, declining to 40.3%, indicating pricing pressure and rising input costs.
- Nike Direct sales dropped 14%, driven by a sharp 26% decline in digital sales, though store sales rose modestly by 2%, showing resilience in brick-and-mortar operations.
Forward Guidance and Strategy
- Q1 FY2026 revenues are expected to decline in the mid-single digits, with further gross margin pressure likely in the first half of the fiscal year.
- Nike is bracing for a $1 billion impact from tariffs, which will affect near-term profitability.
- Despite short-term headwinds, the company maintains its long-term goal of achieving sustainable organic growth and restoring double-digit operating margins.
- Strategic priorities include streamlining inventory, improving efficiency, and refocusing digital efforts after the sharp online sales slump.
Outlook: Management Signals Cautious Optimism
While Nike cautioned that margin pressure may persist into the first half of FY2026, management hinted that the fourth quarter might represent the nadir in performance. The company remains focused on rebuilding momentum through:
- Targeted digital turnaround after a sharp 26% drop in online sales,
- Stabilizing Nike Direct, which saw a 14% decline,
- Mitigating the projected $1 billion tariff burden,
And guiding the brand back toward sustainable organic growth and double-digit operating margins.
Conclusion: Nike’s fourth-quarter performance highlights both its resilience and the challenges it faces. The EPS beat reassured investors of solid operational control, even as revenue and margin pressures remain concerns. As the company works to regain its stride in FY2026, investors are cautiously optimistic, betting that Nike’s global brand power and strategic reset can overcome the near-term turbulence.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Related Articles
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals