Nike reported stronger-than-expected fiscal fourth-quarter 2026 results, with both earnings and revenue topping Wall Street estimates despite continued weakness in several international markets.
The company earned 20 cents per share, a 42.9% increase from a year ago and well above analysts’ expectations of 11 cents per share. Revenue declined 1% year over year to $10.97 billion but still exceeded consensus estimates of $10.85 billion, supported by wholesale growth and stronger demand in North America.
Despite the earnings beat, Nike shares have fallen 7.1% over the past three months, underperforming the broader sector’s 1.8% decline.
On a currency-neutral basis, fourth-quarter revenue decreased 4% as weakness in China and the Europe, Middle East and Africa (EMEA) region offset gains in North America.
Wholesale revenue increased 4% on a reported basis, or 1% on a currency-neutral basis, to $6.6 billion. Meanwhile, Nike Direct revenue declined 7% as reported, and 9% on a currency-neutral basis, to $4.1 billion. The decline reflected a 12% drop in Nike Brand digital sales and a 7% decrease in Nike-owned store revenue.
Regionally, North America remained the company’s strongest market, with revenue rising 3% to $4.83 billion. Footwear sales climbed 4% to $3.23 billion, apparel increased 1% to $1.31 billion, while equipment revenue slipped 1% to $292 million.
EMEA revenue fell 1% on a reported basis, or 6% on a currency-neutral basis, to $2.98 billion. Footwear sales declined 4% to $1.82 billion, while apparel grew 6% to $982 million. Equipment revenue edged down 3% to $172 million.
China continued to be Nike’s weakest region, with revenue falling 12% as reported and 17% on a currency-neutral basis to $1.30 billion. Footwear revenue dropped 13% to $938 million, apparel declined 10% to $334 million and equipment sales fell 17% to $25 million.
Revenue in Asia Pacific and Latin America (APLA) increased 1% on a reported basis but declined 1% on a currency-neutral basis to $1.60 billion. Footwear revenue was unchanged at $1.1 billion, apparel increased 6% to $420 million and equipment declined 2% to $62 million.
Converse revenue dropped 32% on a reported basis, or 34% on a currency-neutral basis, to $244 million, reflecting broad-based declines across all markets.
Gross profit increased 21% year over year to $5.39 billion, while gross margin expanded 890 basis points to 49.2%. The improvement primarily reflected a 900-basis-point benefit from the recovery of IEEPA tariffs. Excluding that benefit, management said gross margin would have been 40.2%, down 10 basis points from the prior year.
Selling and administrative expenses declined 2% to $4.08 billion. As a percentage of revenue, SG&A improved to 37.2% from 37.4% a year earlier. Demand creation expenses fell 4% to $1.20 billion, driven by lower brand marketing costs, while operating overhead declined 1% to $2.88 billion due to lower administrative expenses.
Nike ended fiscal 2026 with $7.56 billion in cash and cash equivalents, up 1% from a year earlier, while short-term investments declined 13% to $1.46 billion. Long-term debt totaled $5.94 billion, and shareholders’ equity stood at $14.87 billion as of May 31, 2026.
Inventory remained flat year over year at $7.50 billion. During fiscal 2026, Nike returned nearly $2.5 billion to shareholders, including $2.4 billion in dividends, up 5% from the prior year, and $123 million in share repurchases under its four-year, $18 billion buyback authorization.
Looking ahead, management said the operating environment remains uncertain due to evolving tariff policies, geopolitical tensions in the Middle East, oil price volatility, rising operating costs, changing consumer spending patterns and softer retail traffic.
For the first quarter of fiscal 2027, Nike expects reported revenue to decline in the low- to mid-single-digit range, with a further sequential slowdown anticipated in the second quarter. Gross margin is expected to turn slightly positive beginning in the first quarter, while the company assumes incremental tariff rates of 10% through the end of July and 15% thereafter.
Management also expects no meaningful foreign exchange benefit, with currency-neutral revenue trends remaining consistent with recent performance. SG&A expenses are projected to remain flat in the first quarter, operating overhead is expected to decline, and demand creation spending is forecast to increase at a high-single-digit rate as Nike ramps up investments ahead of the World Cup. The company said it remains focused on expanding EBIT margins and generating stronger operating cash flow.
