NIKE, Inc. (NKE) Q4 2026: Revenue Decline, Profitability Improvement — Cautiously Optimistic

NIKE, Inc. (NYSE:NKE) reported its fiscal 2026 fourth quarter results, revealing a revenue decline of $0.1 billion or -1% year-over-year, with total revenues reaching $11.0 billion. This performance reflects ongoing challenges in the retail environment, particularly in key markets like Greater China and EMEA, despite some growth in North America.

Key Financial Metrics:

• Fourth Quarter Revenues: $11.0 billion, down $0.1 billion or -1% YoY
• NIKE Brand Revenues: $10.7 billion, flat on a reported basis, down 3% on a currency-neutral basis
• Wholesale Revenues: $6.6 billion, up $0.3 billion or +4% on a reported basis
• NIKE Direct Revenues: $4.1 billion, down $0.3 billion or -7% on a reported basis
• Gross Margin: 49.2%, up 890 basis points, primarily due to IEEPA tariff recoveries
• Net Income: $1.1 billion, up 407% YoY
• Diluted Earnings Per Share (EPS): $0.72, including a $0.52 benefit from IEEPA tariffs

Analyst Opinion

This quarter presents a mixed bag for shareholders. While the revenue decline is disappointing, the significant improvement in net income and gross margin indicates effective cost management and operational efficiencies. The 407% increase in net income is particularly noteworthy, driven by the recovery of IEEPA tariffs, which contributed $986 million to gross margin. This suggests that NIKE is navigating through a challenging environment with a focus on profitability, which is a positive sign for long-term investors.

Additional Insights

• Wholesale Performance: The wholesale segment showed resilience with a 4% increase in revenues, primarily driven by growth in North America. This indicates that NIKE's partnerships with retailers remain strong, even as direct-to-consumer sales face headwinds.
• Direct-to-Consumer Challenges: NIKE Direct revenues fell by 7%, attributed to a 12% decrease in digital sales and a 7% decline in NIKE-owned stores. This trend highlights the need for NIKE to innovate and enhance its digital strategy to attract consumers.
• Converse Brand: The Converse brand struggled significantly, with revenues down 32% on a reported basis. This decline raises concerns about the brand's positioning and market strategy moving forward.

Shareholder Returns

NIKE continues to prioritize shareholder returns, having returned approximately $609 million in the fourth quarter through dividends, marking a 3% increase from the prior year. For the full fiscal year, total returns to shareholders amounted to approximately $2.5 billion, including $2.4 billion in dividends (up 5% YoY) and $123 million in share repurchases.

Forward-Looking Catalysts

Investors should closely monitor NIKE's strategic initiatives in the upcoming quarters, particularly its efforts to enhance digital sales and improve the performance of the Converse brand. Additionally, any updates on the company's operational efficiencies and cost management strategies will be crucial as NIKE navigates a challenging retail landscape. The next earnings call will provide further insights into how NIKE plans to address these challenges and capitalize on growth opportunities.

Note: All amounts are in millions.

Fourth Quarter	% Change	Full Year	% Change
Revenues	10,732	-1	46,400	0
Cost of revenues	5,451	21	26,173	1
Gross margin	49.2 %		42.9 %
Selling and administrative expense	4,072	-2	16,134	0
Demand creation expense	1,246	-4	4,753	1
Operating overhead expense	2,826	-1	11,381	0
Effective tax rate	19.6 %		20.3 %
Net income	1,132	407	3,133	-3
Diluted earnings per share	0.72	414	2.10	-3
Weighted-average shares used to compute net income per share, basic	1,570		1,560

Note: All amounts are in millions.

May 31, 2026	May 31, 2025	% Change
Current assets:
Cash and equivalents	7,563	7,464	1
Short-term investments	1,464	1,687	-13
Accounts receivable, net	5,931	4,717	26
Inventories	7,501	7,489	0
Prepaid expenses and other current assets	2,144	2,005	7
Total current assets	24,603	23,362	5
Property, plant and equipment, net	4,796	4,828	-1
Operating lease right-of-use assets, net	2,838	2,712	5
Identifiable intangible assets, net	259	259	0
Goodwill	240	240	0
Deferred income taxes and other assets	5,674	5,178	10
TOTAL ASSETS	38,410	36,579	5
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	2,000	—	100
Accounts payable	3,600	3,479	3
Current portion of operating lease liabilities	478	502	-5
Accrued liabilities	6,092	5,916	3
Income taxes payable	377	669	-44
Total current liabilities	12,547	10,566	19
Long-term debt	5,942	7,961	-25
Operating lease liabilities	2,613	2,550	2
Deferred income taxes and other liabilities	2,443	2,289	7
Redeemable preferred stock	—	—	—
Shareholders’ equity	14,865	13,213	13
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	38,410	36,579	5

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