To The Moon

$Nike(NKE)$ is slated to release its fiscal Q4 2025 financial results on Thursday, 26 June 2025, after the market closes.

Revenue: Analysts widely expect a significant year-over-year decline in revenue. The Zacks Consensus Estimate is pegged at approximately $10.67 billion to $10.72 billion, representing a 15% to 15.4% drop from the prior year. This aligns with Nike's own guidance of a mid-teens revenue decline for the quarter.

Earnings Per Share (EPS): A substantial decline in EPS is also anticipated. The consensus estimate is around $0.11 to $0.12 per share, indicating a sharp decrease of around 89.1% from the $1.01 reported in Q4 2024.

Analyst Expectations and Key Metrics

Gross Margin: Gross margin is projected to decline significantly, with estimates ranging from a 400-500 basis point (bps) drop to approximately 40.2%. This is largely attributed to aggressive inventory clearance initiatives and anticipated tariff impacts.

SG&A Expenses: SG&A expenses are forecast to decline slightly year-over-year, around 2.4%, but are expected to increase as a percentage of sales due to the revenue decline.

Nike (NKE) Last Neutral Earnings Call Saw Share Price Declined By 13.95%

Nike (NKE) had a neutral earnings call on 20 March 2025 which saw its share price declined by 13.95% since.

The call highlighted a series of strategic actions aimed at reigniting growth through product innovation and brand engagement, particularly in performance categories. However, significant challenges remain, particularly in terms of revenue declines, gross margin pressures, and difficulties in the Greater China market. The company is taking proactive steps to address these issues, but the extent of the challenges suggests a balanced outlook.

Nike (NKE) Guidance

In the call, Nike provided extensive guidance on their strategic priorities and financial performance metrics. For the fiscal 2025 third quarter, revenues were reported to be down 9% on a reported basis and 7% on a currency-neutral basis. Nike Direct saw a decline of 10%, with Nike Digital dropping 15% and Nike Stores declining 2%. Wholesale revenues fell by 4%, primarily due to declines in Greater China. Gross margins decreased by 330 basis points to 41.5%, attributed to higher markdowns, wholesale discounts, and channel mix headwinds. The effective tax rate was 5.9%, compared to 16.5% the previous year, due to a one-time tax benefit.

Earnings per share stood at $0.54. Inventory levels declined by 2% year-over-year, though they remain elevated across geographies. Nike's "Win Now" actions focus on reigniting brand momentum, elevating market presence, and accelerating product portfolio transitions, particularly in performance dimensions such as running and training. The company anticipates the fourth quarter to reflect the largest impact from these strategic actions, with headwinds expected to moderate thereafter. Additionally, Nike is focused on reducing promotional activity, particularly in the Nike Digital channel, and aims to significantly adjust their inventory mix in fiscal 2026.

Key Factors Influencing Q4 2025 Performance

"Win Now" Strategy and Turnaround Plan: Nike is in the midst of a turnaround, implementing its "Win Now" strategy focused on product innovation, strengthening wholesale partnerships, and brand revival. Q4 is expected to reflect the peak effects of this strategy, with management hoping to see headwinds ease afterward.

The performance segment, specifically in running and training, showed growth, with running growing mid-single digits. New product launches like the Pegasus Premium and Vomero 18 have driven healthy volume and are expected to scale further. NIKE launched several new products, including the Peg Premium and Vomero 18, that have received positive consumer responses. The new 24/7 collection in apparel exceeded sales expectations, highlighting successful innovation in both footwear and apparel.

NIKE achieved significant brand impact through high-profile events such as the Super Bowl and NBA All-Star weekend, driving brand engagement with emotional storytelling and on-the-ground activations.

Inventory Overhang and Clearance Efforts: Excess inventory, particularly in classic franchises like Air Force 1 and Jordan 1, has been a major challenge. Nike has been actively liquidating these inventories through discounts and markdowns, which is directly impacting gross margins. This inventory cleanup is expected to persist into fiscal 2026.

NIKE Digital in North America reduced promotional days from over 30 to zero in January and February, indicating a shift towards a full-price business model.

Inventory remains elevated, particularly in classic footwear franchises like Air Force 1, Dunk, and Air Jordan 1, impacting sales and requiring aggressive inventory management strategies.

Weak Lifestyle Product Sales and Sluggish Digital Revenues: The lifestyle segment, including the Jordan brand, has been struggling, particularly in digital channels. This softness in demand for some of their popular products contributes to the overall revenue decline.

Headwinds in Key Geographic Markets

Greater China: This region has been a significant challenge, with sales declines of around 17% in Q3 and a projected 20.4% drop in Q4. Weak consumer demand, pandemic-related restrictions (though easing), and increased competition are all contributing factors.

Overall, revenues were down 9% on a reported basis and 7% on a currency-neutral basis, with major declines in NIKE Direct (down 10%) and wholesale (down 4%), largely due to challenges in Greater China.

Revenue in Greater China declined by 15%, with significant decreases in both NIKE Direct and wholesale channels. The region is experiencing promotional market pressures and increased competition.

EMEA (Europe, Middle East, and Africa): This region is also experiencing weak demand.

North America: While management cited North American shipment timing as a factor in the Q4 revenue decline, macroeconomic factors like inflation and rising interest rates are curbing discretionary spending, affecting premium brands.

Macroeconomic Volatility and Consumer Confidence: Global economic uncertainties, including inflation, recession fears, and reduced consumer purchasing power, are impacting discretionary spending on sportswear and footwear across various markets.

Tariffs and Foreign Exchange Headwinds: New tariffs on imports from China and Mexico, along with unfavorable currency fluctuations, are expected to weigh on profit margins and overall revenue.

Competition: Nike faces intense competition from rivals such as New Balance, Adidas, Hoka, and On Running, particularly in casual footwear and performance categories.

Investor Focus and Outlook

Guidance for Q1 Fiscal 2026 and Full-Year 2026: While Q4 is expected to be a tough quarter, investors will be keenly focused on Nike's outlook for the upcoming fiscal year. They will be looking for signs of stabilization in revenue and margins, and clarity on when Nike expects to return to sustainable growth. Analysts are currently projecting a modest 1% revenue decline for fiscal 2026.

Gross margins fell by 330 basis points to 41.5%, driven by higher markdowns, inventory obsolescence, and product costs.

Progress of "Win Now" Initiatives: Investors will be scrutinizing the earnings call for evidence that Nike's strategic actions are starting to materialize in results, and what CEO Elliott Hill plans to execute in FY26.

Inventory Turnaround: The timeline for clearing excess inventory and its impact on future margins will be a critical point of discussion.

Brand Equity and Innovation: The company's ability to revitalize its brand, drive innovation in performance categories (like running and basketball), and regain market share will be key to long-term success.

Nike (NKE) Price Target

Based on 35 analysts from Tiger Brokers offering 12 month price targets for Nike in the last 3 months. The average price target is $71.14 with a high forecast of $120.00 and a low forecast of $40.00. The average price target represents a 15.83% change from the last price of $61.42.

Technical Analysis - Exponential Moving Average (EMA)

NKE is experiencing a negative momentum where we can see that the bears are still in control despite attempt by the bulls to regain control. It is currently trading range-bound, with the risk of not able to defend its short-term level at 26-EMA and 50-EMA.

If there is any guidance adjustment to the lower side or the progress of its “Win Now” initiatives is not ideal, we could see NKE trading on the downside, towards its previous lows at around $59, if it cannot defend this level, we could be see a drastic decline to $52.

I would hold back buying this stock as there is so much competitions and my recent shopping trip for sports apparel does see how Nike store customers are looking and not buying much despite promotions (this is at an outlet), and competitors like Adidas and Puma are doing much better.

Summary

The general sentiment among analysts is cautious optimism. While they acknowledge the near-term challenges and expect a "messy quarter" in Q4, many believe Nike is doing the right things to turn the business around.

However, they emphasize that these initiatives will take time to bear fruit, and the road to improved fundamentals is likely to be "longer and still highly volatile." Investors are advised to consider a "wait-and-see" approach until clearer signs of stabilization emerge.

Appreciate if you could share your thoughts in the comment section whether you think Nike would be able to provide a strong positive progress of the “Win Now” initiative.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.