NIKE 2025 Q4 Earnings Misses Targets as Net Income Plummets 86%

NIKE (NKE), ranking 131st by market capitalization, reported its fiscal 2025 Q4 earnings on June 26th, 2025. The results narrowly beat market expectations, with earnings per share (EPS) of $0.14 exceeding Wall Street's estimate of $0.13, despite a significant revenue decline. The company's guidance for Q1 revenues predicts a mid-single-digit decrease, aligning with market expectations. NIKE is also bracing for additional costs of $1 billion due to new tariffs, impacting margins further. Despite these challenges, strategic initiatives and cost management are expected to moderate the headwinds moving forward.

Revenue
NIKE reported a total revenue decrease of 12.0% to $11.10 billion in 2025 Q4, down from $12.61 billion in 2024 Q4. The NIKE Brand contributed $10.76 billion, with Footwear generating $7.18 billion, Apparel bringing in $3 billion, and Equipment adding $567 million. Global Brand Divisions contributed $9 million, while Converse brought in $357 million. The Corporate segment showed a negative revenue impact of $-23 million.

Earnings/Net Income
NIKE's EPS declined 85.9% to $0.14 in 2025 Q4 from $0.99 in 2024 Q4. Meanwhile, the company's net income fell to $211 million, down 85.9% from $1.50 billion reported in 2024 Q4. The substantial drop in EPS reflects the company's ongoing challenges.

Price Action
The stock price of NIKE has edged up 1.59% during the latest trading day, has climbed 5.09% during the most recent full trading week, and has climbed 4.20% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Nike (NKE) stocks when its revenues surpassed expectations and holding them for 30 days resulted in poor performance, yielding a return of -20.99%. This significantly underperformed the benchmark return of 43.40%. The strategy also experienced a high maximum drawdown of -50.70%, indicating considerable risk, and a negative Sharpe ratio of -0.20, suggesting that the risk-adjusted return was not favorable. These outcomes reflect the volatility and challenges in accurately predicting stock movements based on earnings results, underscoring the need for cautious investment strategies.

CEO Commentary
Elliott J. Hill - CEO, President & Director, emphasized that NIKE's Q4 and FY '25 results were "not up to the NIKE standard," reflecting ongoing geopolitical volatility and tariff uncertainties. However, he expressed optimism about the "Win Now actions" aimed at repositioning the business, focusing on athlete-centric strategies and a refined leadership structure. Hill highlighted a commitment to reclaiming the brand's voice in sports, enhancing relationships with wholesale partners, and expanding distribution. He noted early signs of improvement in NIKE Direct and a strong product pipeline, stating, "We have everything we need to win... our entire team is ready to run towards something bigger."

Guidance
NIKE expects Q1 revenues to decline mid-single digits with gross margins down approximately 350 to 425 basis points, including a 100 basis points negative impact from new tariffs. The company anticipates SG&A dollars to grow low single digits and a tax rate for the full year of 19% to 20%. For fiscal '26, NIKE aims for a healthy and clean inventory position by the end of the first half, with expectations of continued momentum in performance products and a focus on high-quality, innovative offerings to drive growth.

Additional News
NIKE has announced plans to reduce its reliance on production in China for the U.S. market to mitigate the impact of U.S. tariffs on imports. Additionally, the company has restructured its leadership team, appointing Elliott Hill as the new CEO and President, signaling a strategic shift in its operations. Furthermore, NIKE has increased its marketing expenditure, focusing on driving demand in key categories such as running, basketball, and lifestyle. These moves are part of NIKE's broader strategy to navigate the challenging economic landscape and maintain its competitive edge.