Nike Beats Estimates, but Growth Is Still Nowhere in Sight

Nike reported revenue of $10.97 billion in the fourth fiscal quarter, with revenue for fiscal year 2026 reaching $46.4 billion—representing stagnation on a reported basis and a 2% decline in constant currency. This is significant because, although the quarterly figure slightly exceeded consensus, the annual data show that the company has not yet managed to restore the revenue growth trend following the previous decline in 2025. In the context of the last two years, Nike’s revenue has thus remained at roughly $46.3–46.4 billion, showing no noticeable upward shift, even though the overall performance of the global economy and consumer spending has improved in the meantime.[1]

Quarterly earnings look significantly better than revenue. Net income rose to approximately $1.07 billion from roughly $211 million, diluted EPS rose from $0.14 to $0.72, and the gross margin jumped from 40.3% to 49.2%. However, full-year net income fell to $3.11 billion from $3.22 billion, and EPS to $2.10 from $2.16, so annual profitability remains slightly weaker than a year ago. This means that Nike is not yet showing consistent growth, but rather a result where one strong quarter is driven by a specific factor, while the full-year picture still lags.1

Profit Saved by Tariff Refund

The key factor in the entire quarterly report is a $986 million customs refund under the IEEPA tariffs. In its official earnings announcement, Nike stated that this effect increased the gross margin by approximately 900 basis points, pushing the fourth-quarter margin from 40.3% to 49.2%. At the same time, the company itself calculated that the refund added $0.52 to earnings per share (EPS), which is an extremely significant portion of the reported EPS of $0.72. Without this item, EPS would have been roughly $0.20, which would have represented a much more modest beat of market expectations.1

For the full fiscal year, the gross margin increased from 42.7% to 42.9%, or by just 20 basis points. Gross profit rose to $19.9 billion from $19.8 billion, while direct selling expenses remained at $26.5 billion. This shows that without the one-time effect of tariffs, the margin improvement would have been very modest. Market commentary and specialized analyses have therefore correctly pointed out that although Nike “blasted past” Wall Street estimates, the core of this surprise rests on an item that cannot be repeated every quarter, rather than on a lasting improvement in the business model.1[2]

China and direct sales remain a weak spot

Nike’s biggest weakness was once again evident in Greater China. Revenue in this region fell to $1.30 billion in the fourth quarter, down from roughly $1.48 billion a year ago, a 12% decline on a reported basis and a 17% decline in constant currency. A closer look at the figures shows that footwear sales fell to $938 million, apparel to $334 million, and accessories to $25 million, indicating that the decline is not limited to a single category but is spread across the entire portfolio. In the context of recent years, when China was among Nike’s most important growth markets, this is a significant signal that both demand and the brand’s position in this region have visibly weakened.[3]

The weakness is not limited to geography but also extends to the sales model. NIKE Direct revenue for the quarter fell 7% to $4.1 billion, with Nike’s digital sales plunging 12% and revenue from Nike stores down 7%. The Converse brand saw an even sharper decline, with revenue falling to $244 million from $357 million, a 32% drop on a reported basis and 34% in constant currency. For the full year, NIKE Direct fell by 6% to $17.7 billion, and Converse plummeted by nearly a third. These figures show that in recent quarters, Nike has not been relying on growth from its own channels but has instead been trying to mitigate the decline occurring across multiple parts of its portfolio simultaneously.1

Wholesale Helps, Competition Intensifies

One of the few clear positives was the performance of the wholesale segment. Wholesale revenue in the fourth quarter rose 4% to $6.6 billion, while on a constant-currency basis, it increased by 1%. For the full year, wholesale reached $27.5 billion, representing 6% growth on a reported basis and 4% growth after adjusting for currency effects. This means that Nike can maintain growth precisely in the channel where it relies on partners and distribution, while direct channels are dragging results down. Within the Nike Brand, quarterly revenue was $10.7 billion, virtually flat on a reported basis, but down 3% after adjusting for currency effects, confirming that growth is currently driven more by partnerships than by company-owned stores and digital channels.1

However, wholesale comes with its own limitations. While it allows Nike to maintain volume, it also means the company loses some direct control over margins, the customer experience, and data. Competition is also increasing the pressure. According to available data, Adidas gained a sales lead over Nike during the period surrounding the World Cup, suggesting that its competitor was better able to capitalize on the global soccer event. If Nike is to regain momentum, it won’t be enough to rely solely on the wholesale channel; it will also need to perform more convincingly in product and marketing cycles, where it is currently lagging.[4] [1]

What the Market Will Watch for After These Results

The coming quarters will determine whether Nike can offset the one-time impact of tariffs with sustained operational improvements. The market will be watching closely to see if sales in China rebound from the current level of $1.30 billion and whether the 12% quarterly decline can be reduced or halted. It will also be important to see whether NIKE Direct sales can rebound from the current 7% decline and whether digital sales can overcome the current 12% quarterly decline. If these figures do not improve, the one-time EPS of $0.72 will be viewed more as a poor earnings indicator than as a signal of a genuine turnaround. [2]

In addition, investors will also be interested in the balance sheet and capital discipline. Nike is entering the next period with inventory of around $7.5 billion, cash and short-term investments of roughly $9 billion, total revenue of $46.4 billion, and an annual gross margin of 42.9%. This is a financially sound foundation, but the question that will determine the valuation is whether the company will succeed in translating this financial strength into revenue and profit growth without one-time effects. That is precisely the point of the Q4 2026 results. It is neither a clear victory nor a clear failure, but an intermediate stage in which Nike has bought itself some time—yet it must deliver a genuine turnaround. [3]

[1,2,3] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which is subject to change. Such statements are not a guarantee of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied in any forward-looking statements.

[1] https://investors.nike.com/investors/news-events-and-reports/investor-news/investor-news-details/2026/NIKE-Inc--Reports-Fiscal-2026-Fourth-Quarter-and-Full-Year-Results/default.aspx

[2] https://www.marketwatch.com/story/nike-earnings-crushed-wall-streets-estimates-but-theres-a-catch-83bf3e4a

[3] https://www.cnbc.com/2026/06/30/nike-nke-q4-2026-earnings.html

[4] https://www.reuters.com/sports/soccer/adidas-edging-nike-world-cup-sales-boost-data-show-2026-06-24/