Nike Q4 Earnings Beat Estimates as Wholesale Growth Offsets Direct Sales Weakness

Nike (NYSE: NKE) reported stronger-than-expected fiscal fourth-quarter results, beating Wall Street estimates for both revenue and adjusted earnings as growth in its wholesale business and a one-time tariff-related benefit helped cushion continued weakness in its direct-to-consumer operations.

The global sportswear giant posted fourth-quarter revenue of $11.0 billion, surpassing analysts' consensus estimate of $10.85 billion. Adjusted earnings reached 20 cents per share, comfortably ahead of the expected 12 cents per share. On a reported basis, diluted earnings per share climbed to 72 cents, including a 52-cent boost from the anticipated recovery of tariffs under the International Emergency Economic Powers Act (IEEPA).

Despite the earnings beat, Nike's quarterly revenue still declined 1% year over year, highlighting that the company's turnaround remains a work in progress under CEO Elliott Hill. Investors continue to closely monitor whether Nike can sustain growth after nearly two years of inconsistent performance.

Wholesale revenue increased 4% to $6.6 billion, helping offset weakness in the company's direct-to-consumer segment. Nike Direct revenue fell 7% to $4.1 billion, as digital sales dropped 12% and company-owned store sales declined 7%, reflecting ongoing challenges in consumer demand.

Profitability improved significantly during the quarter. Gross margin expanded to 49.2%, compared with 40.3% a year earlier, primarily driven by a $986 million benefit from the expected tariff recovery, which contributed roughly 900 basis points to margin expansion. Net income surged to $1.1 billion, up from $217 million in the same period last year.

Nike Brand revenue remained flat at $10.7 billion. Growth in North America helped balance weaker sales in Greater China as well as Europe, the Middle East, and Africa. Meanwhile, Converse continued to struggle, with revenue plunging 32% to $244 million, underscoring ongoing challenges for the subsidiary.

For fiscal 2026, Nike generated $46.4 billion in revenue, which was essentially unchanged from the previous year. However, net income declined 3% to $3.1 billion, or $2.10 per diluted share, reflecting continued pressure on profitability despite operational improvements.

CEO Elliott Hill said Nike strengthened its business foundation during the fiscal year and is encouraged by improving momentum in its performance product lineup. He acknowledged that sales remain under pressure but expressed confidence that the company's strategic initiatives are beginning to gain traction.

Chief Financial Officer Matthew Friend added that Nike remains focused on improving profitability, managing costs, and navigating a challenging global retail environment. Investors are expected to remain focused on the company's recovery in Greater China, the performance of Converse, and whether recent gains in wholesale revenue can translate into sustained long-term sales growth.