Nike, Inc.
NKE · NYSE
Next quarter
Reports Oct 1, 2026, after the close.
Consensus is $0.45 EPS for Aug 2026 across 11 estimates, ranging $0.40 to $0.49.
NKE May 2026
- 81.82%
- +4.90%
- $0.11
- $0.20
- —
- —
Highlights
- Headline result: Fiscal fourth-quarter revenue was $11.0 billion, down 1% reported and 4% currency-neutral year over year; diluted EPS was $0.72 in the company release versus $0.14 a year earlier.
- Tariff benefit: Gross margin rose 890 basis points to 49.2%, including an approximately 900-basis-point benefit from the expected recovery of $986 million in IEEPA tariffs; the benefit added $0.52 to diluted EPS.
- Channel mix: Wholesale revenue increased 4% reported and 1% currency-neutral to $6.6 billion, while NIKE Direct declined 7% reported and 9% currency-neutral to $4.1 billion.
- Digital weakness: NIKE Brand Digital revenue fell 12% in the quarter, and NIKE-owned store revenue declined 7%, leaving Direct as the main top-line drag.
- Geographic split: North America revenue grew 3% to $4.8 billion, while EMEA fell 1% to $3.0 billion and Greater China declined 12% to $1.3 billion.
- Converse reset: Converse revenue dropped 32% reported and 34% currency-neutral to $244 million, with declines across all territories.
- Annual picture: Fiscal 2026 revenue was $46.4 billion, flat reported and down 2% currency-neutral; net income fell 3% to $3.1 billion and diluted EPS declined 3% to $2.10.
- Cash and returns: Cash and short-term investments totaled $9.0 billion at May 31, while Nike returned approximately $2.5 billion to shareholders in fiscal 2026, including $2.4 billion of dividends and $123 million of repurchases.
Analysis
Nike's fiscal fourth quarter was a low-growth operating print masked by a large tariff-recovery benefit. Revenue of $11.0 billion was down 1% year over year and below the $11.28 billion in the prior quarter, but net income rose 407% to $1.1 billion from $211 million a year earlier and increased from $520 million in Q3. The company release reported diluted EPS of $0.72, including a $0.52 IEEPA tariff benefit, while the supplied expectations dataset lists reported EPS of $0.20 versus consensus of $0.11, an 81.82% surprise. The release's GAAP EPS figure and the supplied expectations figure therefore do not align.
The underlying business remained uneven. Wholesale was recovering, led by North America, but Direct revenue fell 7% as digital declined 12% and owned stores declined 7%. Greater China remained a material weakness, down 12% reported and 17% currency-neutral for the Nike Brand in the quarter, while Converse fell 32%. For the full year, revenue was essentially unchanged at $46.4 billion, but net income declined 3% and net margin fell to 6.7% from 7.0% in fiscal 2025. Management is repositioning product, marketplace and brand operations, with those actions expected to continue through December 2026 and Greater China and Converse expected to weigh on fiscal 2027.
Tariff recovery and margins
The quarter's earnings rebound was dominated by the expected recovery of tariffs previously paid on U.S. imports. Nike recognized a $986 million benefit in cost of sales after the Supreme Court ruled the IEEPA tariffs unauthorized. The company had received $302 million by year-end and subsequently received substantially all of the remaining receivable.
- Gross profit: Gross profit increased 21% to $5.4 billion, while gross margin expanded to 49.2% from 40.3% a year earlier.
- Earnings impact: Net income reached $1.069 billion, up from $211 million, and diluted EPS was $0.72, including a $0.52 tariff-related benefit.
- Cost control: Selling and administrative expense declined 2% to $4.1 billion, with demand creation expense down 4% to $1.2 billion and operating overhead down 1% to $2.9 billion.
- Underlying caveat: The full-year gross margin improvement was only 20 basis points to 42.9%, as the quarterly tariff recovery largely offset tariff costs recognized earlier in fiscal 2026 rather than representing a recurring margin improvement.
Wholesale versus Direct
Nike continued to shift marketplace emphasis away from its own Direct channel and back toward wholesale partners. Wholesale improved in the quarter, particularly in North America, while Direct remained under pressure from lower traffic and ongoing marketplace actions.
- Wholesale: Revenue was $6.6 billion, up 4% reported and 1% currency-neutral, driven primarily by North America and partly offset by Greater China.
- NIKE Direct: Revenue was $4.1 billion, down 7% reported and 9% currency-neutral.
- Digital: NIKE Brand Digital declined 12%, reflecting reduced traffic and the company's repositioning of the platform toward full-price selling.
- Stores: NIKE-owned store revenue fell 7% in the quarter; for the full year, NIKE store sales declined 4% and comparable store sales decreased 4%.
- Full-year channel mix: Wholesale revenue rose 6% reported to $27.5 billion, while NIKE Direct fell 6% to $17.7 billion.
Regional performance
North America was the clear operating bright spot, while international markets remained mixed. The quarter continued the broader fiscal-year pattern in which North America growth offset declines in Greater China and EMEA.
- North America: Revenue increased 3% to $4.8 billion, with footwear up 4% to $3.2 billion and EBIT rising 91% to $2.0 billion; the EBIT figure included a $965 million tariff-recovery benefit.
- EMEA: Revenue declined 1% to $3.0 billion, or 6% currency-neutral. Currency-neutral footwear revenue fell 9%, while Direct revenue declined 9%.
- Greater China: Revenue declined 12% to $1.3 billion, or 17% currency-neutral. Footwear fell 17% currency-neutral, and EBIT declined 20% to $243 million.
- APLA: Revenue increased 1% reported to $1.6 billion but declined 1% currency-neutral, with apparel growth offsetting weaker footwear and equipment.
- Full year: North America revenue increased 5% to $20.5 billion, while Greater China declined 11% to $5.8 billion and EMEA rose 3% reported but fell 3% currency-neutral.
Converse reset
Converse was the weakest major business and remains in a strategic reset. The decline was broad-based across regions and channels, while lower pricing and reset-related inventory costs pressured profitability.
- Revenue: Converse revenue fell 32% reported and 34% currency-neutral to $244 million in the quarter.
- Channels: Wholesale revenue declined 31% reported and Direct-to-Consumer revenue fell 31%, reflecting reduced traffic across territories.
- Profitability: Converse gross margin fell 490 basis points to 43.8%, while EBIT declined 15% to $23 million in the quarter.
- Full year: Fiscal 2026 revenue fell 31% to $1.2 billion, and EBIT dropped 93% to $18 million from $240 million.
- Outlook from filings: Nike expects negative impacts from Converse to continue throughout fiscal 2027.
Repositioning and liquidity
Management described fiscal 2026 as a year of structural and marketplace changes intended to restore product health and support longer-term growth. The company is accelerating performance-product innovation, reducing supply of selected footwear, elevating physical retail and reallocating distribution toward wholesale.
- Execution window: Nike expects its product, marketplace and brand-management actions to be completed by the end of December 2026, with North America furthest along and Greater China and Converse requiring more time.
- Restructuring: The company recognized $385 million of employee-severance charges in fiscal 2026 and said additional actions could produce further charges.
- Inventory: Inventory was $7.5 billion at May 31, essentially flat year over year, although units increased and product mix changed.
- Cash generation: Operating cash flow declined to $2.9 billion from $3.7 billion, partly because accounts receivable increased with the outstanding tariff receivable and higher wholesale revenue.
- Shareholder returns: Nike paid $2.4 billion of dividends and repurchased $123 million of stock during fiscal 2026; no shares were repurchased in the fourth quarter.
