Nike Bounces Back: Strong Q4 Results Ignite Investor Confidence

Nike Bounces Back: Nike just reminded Wall Street that the world’s largest sportswear brand still has plenty of fight left. Fiscal fourth-quarter 2025 (ended 31 May 2025) revenue of $11.1 billion and diluted EPS of $0.14 both topped muted estimates, sending the shares up roughly 10–11 % in after-hours trading on 26 June 2025.

Below, we unpack what powered the beat, why investors are warming back up to NKE, and what to watch as the company races into FY 2026.

Quick Snapshot: Q4 2025 at a Glance

Metric	Q4 2025	YoY Δ	Street View*	Beat / Miss
Revenue	$11.1 B	−12 %	$10.72 B	✔ Beat
Gross Margin	40.3 %	−440 bps	39.8 % (est.)	✔ Beat
Diluted EPS	$0.14	−86 %	$0.12	✔ Beat
Net Income	$211 M	−86 %	$185 M (est.)	✔ Beat
Inventories	$7.5 B	Flat	—	—

*Consensus compiled by LSEG and FactSet. Figures rounded.

---

Key Drivers Behind the Surprise Beat

1. Wholesale Holds Up Better Than Feared – Wholesale revenue slipped 9 %, but analysts had braced for low-teens declines. Retail partners aggressively cleared legacy sneaker models earlier in the year, easing pressure on close-outs.
2. “Sport Offense” Realignment Starts to Click – CEO Elliott Hill doubled down on performance franchises such as Pegasus and Vomero. Running—a category Nike had been losing share in—returned to growth.
3. Marketing Muscle – Demand-creation spend jumped 15 %, with star-studded campaigns around the Paris Olympics and record-chasers like Faith Kipyegon. More eyeballs drove traffic to both Nike-owned stores and resale platforms.
4. Cost Discipline – Operating overhead fell 3 %, thanks to FY 2024 restructuring and tighter wage controls. The savings cushioned margin erosion from discounting.

---

Financial Deep Dive

Revenue Mix Shifts

• NIKE Direct fell 14 %, dragged down by a 26 % drop in digital. Shop-in-shop concepts underperformed, but in-line stores eked out 2 % growth.
• Wholesale now contributes 58 % of brand revenue, the highest mix in five years—a pivot back to partners Nike had shunned during its direct-to-consumer (DTC) sprint.

Regional Performance

• North America: –11 % revenue, but running footwear +4 %—its first positive print since FY 2023.
• Greater China: –21 %; executives flagged tougher macro and fierce local competition.
• EMEA & APLA: mid-single-digit declines, cushioned by women’s football and cricket sponsorships ahead of the 2025 summer sports calendar.

Margin Math

Gross margin compressed 440 bps to 40.3 %:

• Higher discounts on aging lifestyle sneakers (e.g., Air Force 1).
• Channel mix shift back toward wholesale.
  The impact was partially offset by lower freight and cheaper cotton.investors.nike.com

---

Tariffs, Sourcing, and the China Question

U.S. tariffs could add ≈ $1 billion in costs, prompting Nike to cut the share of U.S.-bound production made in China from 16 % to the “high-single-digit” range by May 2026. Sourcing is being diversified to Vietnam, Indonesia, and near-shore Latin American partners, helping de-risk the supply chain and blunt headline risk around U.S.–China relations.

---

Street Reaction: Why Analysts Turned Cautiously Bullish

• Price-Target Resets – Several houses lifted 12-month targets to $71–75 (from mid-60s), hinging on “early evidence of traction” in running and women’s.
• Technical Tailwinds – Chart watchers flagged a breakout above $59 support with room to test the 200-day moving average near $71.
• Sentiment Shift – Short interest fell 14 % week-on-week post-earnings, indicating that the bear crowd is backing off. Options skew now favors calls over puts for the first time since February.

---

Competitive Landscape & Olympic Catalyst

Brand	Latest Quarter Revenue Growth	Key 2025 Plays
Nike	–12 %	Paris Olympics kits; Pegasus 42 launch
Adidas	–6 %	Samba & Gazelle “terrace” revival
Lululemon	+10 %	Men’s footwear push
Under Armour	–5 %	New Curry Brand running shoe
On Holding	+21 %	Paris marathon partnership

The Olympic spotlight typically boosts Nike sell-through by 200–250 bps in the two quarters surrounding the Games, a tailwind rivals envy.

---

Risks & Red Flags

• China Recovery Slow-Burn – The region still contributes ~14 % of sales; any macro relapse or local insurgent brands (Anta, Li-Ning) could prolong the slump.
• Tariff Wildcards – A U.S. policy shift in election year 2026 could tighten or loosen pressure.
• Fashion Cycles – If the “terrace” trend (retro leather sneakers) keeps stealing mind-share from performance styles, Nike’s core differentiation may erode.

---

Outlook for FY 2026: Management Guide

Metric	FY 2026 Guidance	Street Consensus
Revenue	Down mid-single digits YoY (vs. –10 % FY 2025)	–6 %
Gross Margin	Flat to +50 bps	+30 bps
EPS	Low-to-mid-$2 range	$2.28

Management believes the “largest financial impact” from Win Now restructuring is already booked.

---

Should You Buy Nike Stock After the Pop?

Bull Case:

• Running category inflection + Olympic halo could restore top-line growth faster than the market discounts.
• Valuation retraced to 23× forward EPS, below the five-year average of 31×.

Bear Case:

• Digital deceleration suggests the DTC dream may take years to regain momentum.
• Another fashion misfire could compel deeper discounting, keeping margins under water.

For risk-tolerant, long-horizon investors, nibbling below the mid-60s offers a favorable risk-reward skew—but position-size prudently given near-term volatility.

---

Key Takeaways

• Surprise Beat: Nike outperformed beaten-down expectations on revenue, margins, and EPS, sparking a double-digit stock bounce.
• Turnaround Signs: Running shoes regained growth, and cost discipline offset discounting pressures.
• Investor Confidence Returns—but Cautiously: Analysts nudged targets higher, yet most still rate the stock “Hold” pending proof of sustained growth.
• Watch FY 2026 Guide: Mid-single-digit revenue decline implies improvements, but execution on sourcing shifts, Olympic merchandising, and digital revamp will be critical.

Final Word

Nike’s Q4 2025 print was far from perfect—sales and profit still shrank sharply—but in a market primed for doom, “less bad” was good enough. Early wins in running, disciplined costs, and an Olympic-year catalyst have investors lacing up for a comeback run. Whether Nike can sprint back to its growth-stock glory will depend on flawless execution of its sport-offense playbook and a steady cadence of must-have performance products. For now, the Swoosh has at least regained its forward momentum—and that’s a start.