Nike (NKE) Stock Drops After Earnings as China Sales Slide 12%

TLDR

• Nike beat Wall Street estimates with EPS of 20 cents adjusted vs. 13 cents expected, and revenue of $10.97 billion vs. $10.86 billion expected
• China revenue dropped 12% to $1.30 billion, though it still beat analyst expectations of $1.24 billion
• Gross margin rose 8.9%, boosted by a ~$986 million tariff refund after the Supreme Court struck down many of Trump’s global duties
• NKE stock fell around 3.5% in premarket Wednesday; the stock is down roughly 35% in 2026
• Nike guided for “flattish” earnings through the first two quarters of fiscal 2027, with revenue declines expected through the first half

Nike beat earnings expectations for its fiscal fourth quarter, but investors weren’t buying it. The stock dropped around 3.5% in premarket trading Wednesday after a cautious outlook and ongoing China weakness overshadowed the headline numbers.

NIKE, Inc., NKE

Nike reported adjusted EPS of 20 cents, well ahead of the 13 cents analysts expected. Revenue came in at $10.97 billion, topping estimates of $10.86 billion.

The company’s gross margin jumped 8.9% in the quarter. A big reason: a tariff refund of nearly $986 million, following the Supreme Court’s decision to strike down many of President Trump’s global tariffs. That refund contributed 52 cents to earnings per share, a figure analysts excluded from their adjusted estimates. Nike said it had collected over $300 million in cash from those claims by quarter end.

Net income hit $1.07 billion, or 72 cents per share, a sharp jump from $211 million, or 14 cents per share, in the same quarter last year.

China Remains a Weak Spot

Greater China revenue fell 12% to $1.30 billion. It still beat Wall Street’s $1.24 billion estimate, but the drop underlines how much ground Nike has to recover in its third-largest market. CEO Elliott Hill said the company is “fully committed to winning” China back, but acknowledged results “aren’t there yet.”

Outgoing CFO Matt Friend said China revenue will likely stay under pressure as Nike works with retail partners to clear excess inventory. China accounts for roughly 15% of Nike’s annual revenue.

North America, Nike’s biggest market, grew 3% to $4.83 billion, but came in just below StreetAccount’s estimate of $4.88 billion.

Sportswear sales fell by a double-digit percentage in the quarter. Friend said Nike’s consumer is “under pressure around the world.”

Outlook Keeps a Lid on Optimism

Nike guided for “flattish” earnings through the first two quarters of fiscal 2027, with revenue expected to decline in the first half. Gross margin for Q1 fiscal 2027 is projected to be slightly positive.

Bernstein analysts noted that “revenue declines through H1 mean no earnings growth until at least H2’27 as Nike prioritizes marketplace health over near-term sales.”

NKE stock has fallen roughly 35% in 2026. European rivals Adidas and Puma each dropped more than 1% following Nike’s results.

On a brighter note, Hill pointed to strong World Cup marketing momentum, faster product launches, and improving football demand. Nike plans to launch more than a dozen new footwear styles, though Hill acknowledged it will take time for those to deliver consistent results.

Nike also confirmed an upcoming CFO transition, with former Pfizer executive David Denton replacing Friend effective August 17.

Nike’s forward price-to-earnings ratio stands at 21.95, compared with 16.81 for Adidas, per LSEG data.

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