Nike Inc (NKE) Q4 2025 Earnings Call Highlights: Navigating Challenges with Strategic Initiatives
Revenue: Down 12% on a reported basis and 11% on a currency-neutral basis for Q4.
NIKE Direct: Declined 14%, with NIKE Digital down 26% and NIKE stores up 2%.
Wholesale Revenue: Decreased by 9%.
Gross Margin: Declined 440 basis points to 40.3% due to higher discounts and supply chain costs.
SG&A Expenses: Increased by 1%, driven by a 15% rise in demand creation expenses.
Effective Tax Rate: Increased to 33.6% from 13.1% the previous year.
Earnings Per Share (EPS): $0.14 for the quarter.
Full-Year Revenue: Down 10% on a reported basis and 9% on a currency-neutral basis.
Full-Year EPS: $2.16.
Inventory: Flat versus the prior year and down 1% versus the prior quarter.
North America Revenue: Declined 11% for Q4.
EMEA Revenue: Declined 10% for Q4.
Greater China Revenue: Declined 20% for Q4.
APLA Revenue: Declined 3% for Q4.
Tariff Impact: Estimated gross incremental cost increase of approximately $1 billion.
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Release Date: June 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Nike Inc (NYSE:NKE) is implementing 'Win Now' actions to reposition its brands and business for future growth, showing early signs of improvement.
The company is focusing on a sport offense strategy, organizing into sport-obsessed teams to drive innovation and create sharper brand distinction.
Nike Inc (NYSE:NKE) is expanding its distribution with strategic partners, including a new partnership with Amazon, to reach a wider range of consumers.
The company is seeing positive feedback from wholesale partners, with an improving order book and increased sell-through of new products.
Nike Inc (NYSE:NKE) is making progress in rebalancing its product portfolio, with strong performance in running and women's basketball segments.
Nike Inc (NYSE:NKE) reported a 12% decline in revenues for the fourth quarter, with significant declines in NIKE Digital and wholesale segments.
Gross margins declined by 440 basis points due to higher discounts and supply chain cost deleverage.
The company is facing challenges in the Greater China market, with a 20% revenue decline and ongoing efforts to clean up the marketplace.
Nike Inc (NYSE:NKE) is dealing with new tariffs, which are expected to have a $1 billion cost impact, affecting gross margins in the near term.
The company anticipates continued headwinds from managing down classic footwear franchises and repositioning NIKE Digital as a full-price model.
Q: Could you elaborate on the accelerated actions under your sport offense realignment and the phasing of innovation into the back half of FY26? A: Elliott Hill, President and CEO, explained that Nike is organizing into sport-obsessed teams to drive a continuous flow of innovative products across all brands and categories. The focus on sport is expected to create sharper brand distinction and dimension. He highlighted running as a successful example, with products like Vomero 18 becoming a $100 million business. The product pipeline is strengthening with each season, and Nike is confident in its ability to innovate and differentiate in the marketplace.
Q: Is the continued cleanup of the marketplace consistent with prior plans, or have you found something new? A: Matthew Friend, CFO, confirmed that the cleanup is consistent with prior plans. Nike remains on track to achieve a healthy and clean marketplace by the end of the first half of fiscal '26. The quality of inventory has improved, and the holiday order book being up indicates progress in cleaning the channel and partner investment in new products.
Q: Are you expecting gross margin pressures to abate sequentially as the year progresses, and is there an opportunity to return to growth in the back half? A: Matthew Friend stated that margins are expected to remain under pressure in the first half of '26 due to strategic actions and tariff timing. However, these pressures are expected to moderate in the second half. The focus is on managing product and channel mix headwinds, transitory impacts from Win Now actions, and newly implemented tariffs.
Q: Can you discuss the opportunity to drive full recovery in the China marketplace over time? A: Elliott Hill emphasized the long-term opportunity in China, despite current challenges. Nike is focused on cleaning up the marketplace, elevating digital, and investing in new retail concepts. The key to success is connecting locally and elevating consumer-led product concepts. While changes will take time, Nike is committed to pulling the right levers for growth.
Q: Structurally, is there any reason why Nike should not be a double-digit margin business once current challenges are cleared? A: Matthew Friend expressed confidence in returning to double-digit margins, highlighting that the Win Now actions are designed to reposition Nike as a full-price brand and reignite growth. With disciplined expense management and a focus on sustainable organic revenue growth, Nike aims to achieve operating leverage and return to double-digit margins over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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