Nike Q4 Earnings Preview: Will This Be the Turnaround Quarter for the Swoosh?

Nike is set to report fiscal fourth-quarter earnings after the market close today, and investors are bracing for what may be another rough outing for the global athletic giant. The stock has significantly underperformed—down roughly 35% year-over-year—as concerns mount around intensifying competition, supply chain exposure to tariffs, and a cloudy consumer outlook. However, with new CEO Elliott Hill aggressively implementing a turnaround strategy and many on the Street calling this a potential "kitchen sink" quarter, today’s report could serve as an inflection point. The central question for investors is whether Nike’s fiscal reset will lay the groundwork for a rebound—or if more pain lies ahead.

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At the center of expectations is a broad assumption that this quarter will mark the bottom for Nike’s fundamentals. Analysts forecast Q4 revenue of $10.72 billion, down nearly 15% year-over-year from $12.61 billion, and adjusted EPS of just $0.13—a stunning 87% decline from $1.01 a year ago. Gross margins are expected to be under severe pressure, with guidance from CFO Matthew Friend already warning of a 400 to 500 basis point contraction, driven by tariffs, heavy discounting, and elevated inventories. Same-store sales at Nike-owned stores are expected to decline 2.6%, an improvement from the prior quarter’s 3% drop, but still a negative print.

One reason for the steep earnings contraction is the company’s deliberate push to purge stale inventory and reset its product pipeline. Hill’s “Win Now” transformation strategy includes price rationalization, tighter channel controls, and a return to wholesale partnerships that had been scaled back under his predecessor. Jefferies expects EBIT margins to be down roughly 1050bps this quarter, calling the print “painful,” but also sees Q4 as the trough—citing progress on inventory cleanup, product innovation, and renewed wholesale relationships. They continue to forecast a V-shaped recovery into fiscal 2027.

Key metrics to watch include gross margins, inventory levels, digital and DTC (direct-to-consumer) sales trends, and any color around channel performance. Investors will also be closely attuned to North America, which accounts for roughly 40% of Nike’s revenue, and China, historically a margin-rich region but one that has deteriorated sharply in recent quarters. Recent checks suggest a worsening retail environment in China, and many analysts, including Evercore ISI, expect management to remain cautious in its tone around the region.

Tariffs remain another structural headwind. While Nike has taken steps to diversify its supply chain—reducing apparel and footwear production in China from 26% and 29% in 2016 to 18% and 16% in 2024—it remains significantly exposed to Asia. President Trump’s reimposed 104% tariffs on China in April (since paused) and the current baseline 30% rate create ongoing cost risk. Management has responded with price hikes on high-end SKUs and tighter cost controls, but the net effect on margins remains under scrutiny.

Despite these challenges, there are some green shoots. Foot traffic declines moderated in May to just -3.2% versus -10.2% in April, and web traffic is improving, buoyed by new releases such as the Vomero 18 and Pegasus Premium lines. Analysts at Raymond James and Piper have noted that discounting levels on Nike.com have dropped sharply, suggesting improved inventory discipline. Additionally, Nike’s management overhaul—the most sweeping in decades—may begin to yield structural benefits over the next year.

Geographically, investors will want to watch not just China and North America, but also Europe and Latin America. These markets have been more stable but are not large enough to offset softness in the core geographies. Wholesale commentary will also be key, as Nike seeks to rebuild relationships with key partners after years of pulling back to focus on DTC.

On valuation, Nike may look more interesting to long-term investors than recent performance suggests. The stock trades at roughly 1.9x forward sales, near 10-year lows, and well below its historical average P/E multiple. While FY26 consensus EPS estimates have been sliding—now in the $1.50–$1.87 range depending on the analyst—bulls argue that $3.00–$4.00 in EPS is still achievable longer-term if Nike restores margins and reignites topline growth. Evercore believes the stock can return to a 30x P/E on normalized earnings once the reset is behind it.

While the company no longer provides full-year guidance, any hints about Q1 or FY26 will be heavily scrutinized. Most analysts expect a cautious tone, especially given persistent concerns around China, tariffs, and macro volatility. Deutsche Bank, for example, expects Q1 EPS guidance to come in well below the current $0.37 consensus, potentially in the $0.15–$0.20 range.

This earnings report won’t settle the long-term bull-bear debate, but it could mark a turning point. If Nike shows measurable progress on inventory, improved sales in key franchises, and a steadying margin outlook, it may finally put a bottom in place. With expectations depressed and sentiment near a low, the setup is there—now it’s up to Nike and CEO Elliott Hill to deliver.