Nike Stock Gains Despite Weak Q4 Results, Q1 Outlook; Sees $1 Bln Tariff Impact

(RTTNews) - Shares of Nike Inc. were up around 11 percent in the extended trading on Thursday on the NYSE and are currently gaining around 10 percent in pre-market activity, despite reporting a sharply lower fourth-quarter results with the biggest hit from its turnaround plan. Further, the sportswear giant projects weak margin and sales in its first quarter, but slower than the preceding quarter.

In its earnings call, Nike said it expects U.S. tariffs on imports to add around $1 billion to its costs, but intends to fully mitigate such costs over time as it adjustes supply chain, and implements price increases.

According to Matthew Friend, Executive Vice President & Chief Financial Officer, the fourth-quarter results reflected the largest financial impact from the company's Win Now actions.

Further, Elliott Hill, President & CEO, NIKE, said, "While our financial results are in-line with our expectations, they are not where we want them to be. Moving forward, we expect our business to improve as a result of the progress we're making through our Win Now actions. As we enter a new fiscal year, we are turning the page and the next step is aligning our teams to lead with sport through what we are calling the sport offense. This will accelerate our Win Now actions to reposition our business for future growth."

Looking ahead for the first quarter, Nike sees revenues to be down mid-single digits and gross margins to be down approximately 350 to 425 basis points. This includes around 100 basis points negative impact due to the new tariffs.

For fiscal 2026, the company projects the financial impact, net of the actions to be approximately 75 basis points to gross margin, with a greater impact in the first half.

In the fourth quarter, Nike's net income plunged 86 percent to $211 million from last year's $1.50 billion. Earnings per share fell to $0.14 from $0.99 a year ago.

EBIT declined across all geographies, with the largest drop in Greater China at 45 percent.

Selling and administrative expense increased 1 percent. Gross margin decreased 440 basis points to 40.3 percent, primarily due to higher wholesale discounts, higher discounts in NIKE Factory Stores, supply chain cost deleverage and channel mix headwinds.

The company's revenue for the period fell 12 percent to $11.10 billion from $12.61 billion last year. Revenues were down 11 percent on a currency-neutral basis.

Revenues for the NIKE Brand were $10.8 billion, down 11 percent, driven by declines across all geographies. NIKE Direct revenues of $4.4 billion were down 14 percent, due to a 26 percent decrease in NIKE Brand Digital, partially offset by a 2 percent increase in NIKE-owned stores.

In the quarter, wholesale revenues dropped 9 percent from last year to $6.4 billion. Revenues for Converse dropped 26 percent due to declines across all territories.

On a regional basis, revenues declined 11 percent in North America, 10 percent in EMEA, 20 percent in Greater China and 3 percent decline in APLA.

Inventories for NIKE were $7.5 billion, flat compared to the prior year.

In the after-hours trading on the NYSE on Thursday, Nike shares gained 10.5 percent after closing the day's regular trading 2.8 percent higher.

In the pre-market activity, the shares were gaining around 9.8 percent to trade at $68.68.

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