Nike Beats Estimates But China Sales Drop and Tariff Windfall Mask Deeper Challenges
- Alexij K. Fartelj
- 1 day ago
- 1 min read
Nike's latest earnings exceeded expectations, but one-time gains and persistent weakness in China continue to weigh on the company's recovery.
Nike reported fiscal fourth-quarter revenue of €9.37 billion, exceeding analyst expectations, while adjusted earnings also came in ahead of forecasts. However, much of the company's stronger profitability was driven by a one-time tariff refund after the U.S. Supreme Court struck down several U.S. tariff measures, boosting results beyond underlying operating performance.
Net income surged more than 400% year-over-year to approximately €915 million, supported by a tariff benefit of roughly €844 million, which helped lift gross margin to 49.2%. Excluding the one-off recovery, the company's full-year revenue remained broadly unchanged and net income declined compared with the previous fiscal year.
China remains Nike's biggest challenge. Revenue in Greater China fell 12% to approximately €1.11 billion, extending a multi-quarter decline as domestic competitors Anta and Li-Ning continue gaining market share. CEO Elliott Hill said Nike is "fully committed to winning" the market back but acknowledged that "the results aren't there yet."
North America was the strongest-performing region, with revenue rising 3%, while wholesale sales increased as Nike rebuilt retailer relationships. At the same time, Nike Direct revenue fell 7%, digital sales declined 12%, and Converse revenue dropped 32% across all markets.
Despite the earnings beat, investors focused on weaker forward guidance. Nike expects first-quarter fiscal 2027 revenue to decline between 2% and 4%, contributing to a reversal in after-hours trading after shares initially rose following the earnings release.
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