NIKE Tops Q4 Earnings & Revenues, Shows Progress on Win Now Strategy

NIKE Inc. NKE reported fourth-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, revenues and earnings per share (EPS) fell year over year. The company’s EPS of 14 cents declined 86% from the year-ago level. However, the figure beat the Zacks Consensus Estimate of 12 cents.Revenues of the Swoosh brand owner declined 12% year over year to $11.1 billion but surpassed the Zacks Consensus Estimate of $10.69 billion. On a currency-neutral basis, revenues were down 11% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)Revenues at NIKE Direct were down 14% on a reported and currency-neutral basis to $4.4 billion. The decline resulted from a 26% drop in NIKE Brand Digital, offset by a 2% increase in NIKE-owned stores. Also, wholesale revenues declined 9% year over year on a reported and currency-neutral basis to $6.4 billion.NIKE’s shares rose 2.8% yesterday, driven by the company’s decent results and forward outlook. This Zacks Rank #3 (Hold) company’s shares have lost 1.2% in the past three months against the industry’s 0.1% gain.Image Source: Zacks Investment ResearchNKE’s Operating Segment Synopsis for Q4NIKE Brand revenues of $10.8 billion declined 11% year over year on a reported and currency-neutral basis. Results were affected by decreases in all geographies. We estimated total NIKE Brand revenues to decrease 15.4% year over year to $10.3 billion in the fiscal fourth quarter due to an 11.8% decline in Direct-to-Consumer and an 18% fall in the Wholesale business.Within the NIKE Brand, revenues in North America declined 11% year over year to $4.7 billion. Sales at NIKE Direct were down 14% in the region, including a 25% decrease at Nike Digital offset by a 3% increase at NIKE Stores. North America advanced its efforts to clean up the marketplace and shift Nike Digital to a full-price strategy. Wholesale sales declined 8% year over year in North America. Wholesale is gaining momentum, fueled by new and compelling product offerings. led by favorable shipment timing and higher shipments to value partners.In EMEA, the company’s revenues declined 9% year over year on a reported basis and 10% on a currency-neutral basis to $3 billion. Wholesale business revenues fell 4% year over year. NIKE Direct revenues for the segment declined 19%, with a 36% decrease at NIKE Digital being offset by 5% growth in NIKE Stores.NIKE, Inc. Price, Consensus and EPS Surprise NIKE, Inc. price-consensus-eps-surprise-chart | NIKE, Inc. QuoteIn Greater China, revenues dropped 21% year over year on a reported basis and 20% on a currency-neutral basis to $1.5 billion. NIKE Direct fell 15%. NIKE Digital revenues dropped 31% year over year and NIKE stores decreased 6%. Wholesale revenues for the region declined 24% year over year.In APLA, revenues fell 8% year over year on a reported basis and 3% on a currency-neutral basis to $1.6 billion. NIKE Direct dipped 1% due to a 6% decline in NIKE Digital, negated by a 4% rise in NIKE stores. Wholesale revenues declined 5% in the region.Revenues at the Converse brand dropped 26% on a reported and currency-neutral basis to $357 million. The decline was due to softness across all territories.A Look at NIKE’s Costs & MarginsNIKE’s gross profit declined 21% year over year to $4.5 billion, while the gross margin contracted 440 basis points (bps) to 40.3%. The gross margin decline was caused by increased wholesale discounts, higher discounts in Nike factory stores, supply chain cost deleverage and changes in channel mix. We anticipated the gross margin to decline 450 bps to 40.2%.Selling and administrative expenses rose 1% to $4.1 billion. As a percentage of sales, SG&A expenses increased 500 bps year over year to 37.4%. The rise in SG&A expenses rate was led by higher demand creation expenses, offset by reduced operating overhead expenses. Our model predicted SG&A expenses of $4.2 billion, indicating a rise of 2.4% year over year.Demand creation expenses increased 15% year over year to $1.3 billion, led by higher brand and sports marketing expenses. Operating overhead expenses were down 3% year over year to $2.9 billion on reduced wage-related expenses, lower other operating costs and restructuring charges in the year-ago period.Our model predicted demand creation expenses of $1.2 billion, indicating a year-over-year rise of 12.2%. Operating overhead expenses were anticipated to decline 1.1% year over year to $2.96 billion.NKE’s Balance Sheet & Shareholder-Friendly MovesNIKE ended fiscal 2025 with cash and cash equivalents of $7.5 billion, down nearly 24% year over year. Short-term investments totaled $1.7 billion, down 2% year over year. As of May 31, 2025, the company had a long-term debt (excluding current maturities) of $7.96 billion and shareholders’ equity of $13.2 billion.As of May 31, inventories totaled $7.5 billion, flat year over year. The company ended fiscal 2025 in line with its plans and remains on track to exit the first half of fiscal 2026 with a healthy and clean inventory position. NIKE plans to continue liquidating excess inventory through value stores and select partners in the next two quarters. In the second half of fiscal 2026, the company expects a modest revenue headwind, as it laps the prior year’s aggressive markdowns.In the fiscal fourth quarter, the company returned $0.8 billion to shareholders, including $202 million in share repurchases and $591 million in dividends. In fiscal 2025, the company returned $5.3 billion to shareholders, including $3 billion in share repurchases and $2.3 billion in dividends. As of May 31, NIKE repurchased 122.6 million shares for $12 billion, as part of its four-year $18-billion share repurchase program approved in June 2022.NKE’s Forward PlansWhile NIKE remains committed to providing quarterly guidance in the transition period, management provided additional perspective on how its "Win Now" initiatives are expected to shape the key aspects of its financial performance throughout fiscal 2026. The company is witnessing growing momentum in its new product franchises. With the holiday order book now in hand, the company has increased visibility into the next phase of its product portfolio transition. It noted that the holiday order book is up year over year for fiscal 2026, with growth in North America, EMEA and APLA partially offset by Greater China.In fiscal 2025, NKE made meaningful progress in scaling down its classic footwear franchises, which declined more than 20% year over year. These declines accelerated in the fiscal fourth quarter, exceeding 30% and creating an almost $1 billion revenue headwind. Classic styles also declined 10 percentage points from peak levels, as a percentage of the company’s total footwear mix. The company expects these headwinds to persist through the first half of fiscal 2026. The company is starting to see signs of stabilization in Air Force 1, although it plans for deeper reductions in the Dunk line.The company expects digital traffic to be down in double digits in fiscal 2026 as it repositions NIKE Digital as a full-price model and reduces the mix of its classic footwear franchises. Additionally, the company is seeing encouraging signs of progress in the marketplace with its wholesale partners.For fiscal 2026, NIKE expects SG&A expenses to increase by low single digits as it strategically invests to reignite growth across the business. A key area of focus is demand creation, where NKE is ramping up efforts to reconnect with consumers and reenergize brand engagement. The company is also actively rebuilding both sport and commercial offense to better position itself for long-term success.At the same time, the company remains mindful that SG&A has deleveraged compared with historical levels. Looking ahead, the company’s priority is to return the business to sustainable, organic sales growth, supported by improving gross margins and a disciplined approach to expense management. This balance between investing for future growth and maintaining cost efficiency will be critical in strengthening its overall financial performance.NKE’s Q1 OutlookNIKE also outlined its guidance for first-quarter fiscal 2026. It projects fiscal first-quarter revenues to decline in mid-single digits. The gross margin is expected to contract nearly 350-425 bps, comprising a 100-bps negative impact from the new tariffs, based on the currently prevailing rates.Management forecasts SG&A dollars to be up in low single digits. The company predicts other income and expenses, including net interest income, to be $0-$10 million for the fiscal first quarter. Management expects the tax rate to be 19-20%, driven by anticipated changes in earnings mix.Key Consumer Discretionary PicksWe have highlighted three better-ranked stocks, namely Urban Outfitters URBN, Duluth Holdings DLTH and Sportsman's Warehouse SPWH.Urban Outfitters, a lifestyle specialty retailer, carries a Zacks Rank #1 (Strong Buy). URBN has a trailing four-quarter earnings surprise of 29%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2025 sales and EPS indicates an increase of 8.5% and 22.2%, respectively, from the year-ago levels. The consensus mark for fiscal 2025 EPS has moved up 1% in the past 30 days.Duluth Holdings provides casual wear, workwear and accessories for men and women. The company currently carries a Zacks Rank #2 (Buy). Duluth Holdings has a trailing four-quarter negative earnings surprise of 21%, on average. The Zacks Consensus Estimate for DLTH’s current financial-year EPS indicates growth of 18.3% from the year-ago figure. The consensus mark for fiscal 2025 loss per share has narrowed significantly from 67 cents to 58 cents in the past 30 days.Sportsman's Warehouse is an outdoor sporting goods retailer. It carries a Zacks Rank of 2 at present. SPWH has a trailing four-quarter earnings surprise of 72.3%, on average.The Zacks Consensus Estimate for SPWH’s fiscal 2025 sales and EPS indicates an increase of 1.2% and 30.2%, respectively, from the year-ago levels. The consensus mark for fiscal 2025 loss per share has narrowed significantly from 45 cents to 37 cents in the past 30 days.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Duluth Holdings Inc. (DLTH): Free Stock Analysis Report Sportsman's Warehouse Holdings, Inc. (SPWH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks