Nike, Inc. (NYSE: NKE) Q4 2025 Earnings | 6/27/2025

Nike's Q4 2025 Performance & Future Outlook: "Win Now" Actions Taking Hold Amidst Headwinds

Nike, Inc. reported its Fiscal 2025 Fourth Quarter results, acknowledging that performance was "not up to the Nike standard" but expressing confidence that "Win Now" actions implemented over the last eight months are having an impact and business results are expected to improve. The call highlighted significant strategic shifts and financial impacts.

Key Financial Highlights (Q4 FY25 vs. Prior Year):

• Revenues: Down 12% reported, 11% currency neutral.

  • Nike Direct: Down 14% (Digital down 26%, Stores up 2%).

  • Wholesale: Down 9%.

• Gross Margin: Declined 440 basis points to 40.3%, attributed to higher wholesale discounts, increased discounts in factory stores, supply chain cost deleverage, and channel mix headwinds.

• SG&A: Up 1% reported, driven by a 15% increase in demand creation investment, partially offset by a 3% decline in operating overhead.

• Effective Tax Rate: 33.6% (compared to 13.1% last year).

• Earnings Per Share (EPS): $0.14.

• Full Year FY25 Revenue: Down 10% reported, 9% currency neutral.

• Full Year FY25 Diluted EPS: $2.16.

• Inventory: Flat year-over-year, down 1% versus prior quarter. Still elevated but on track to be healthy by end of H1 FY26.

"Win Now" Actions and Strategic Shifts:

Nike is aggressively repositioning its business through several "Win Now" actions, with a sharp focus on:

• Sport Offense Realignment: Shifting from a men's, women's, and kids' construct to dedicated, cross-functional teams organized by sport for deeper athlete relationships, better insights, sport-specific innovation, and differentiated storytelling. This applies to Nike, Jordan, and Converse brands.

• Product Portfolio Rebalancing: Making progress in balancing sportswear and performance.

  • Performance: Strong momentum in Nike Running (high single-digit growth), led by Vomero 18 ($100M+ franchise in 90 days). Women's basketball expanded 50% this fiscal year, with A'ja Wilson's signature collection (A1 shoe) selling out in three minutes on Nike Digital NA.

  • Sportswear: Aggressively right-sizing franchises like Air Force One, Dunk, and AJ1. Reintroducing Air Max 95 to a new generation. Look of running footwear (P6000, Vomero 5, Shox) showing continued strength.

• Marketplace Segmentation: Investing in Nike Direct (digital and physical) and thoughtfully segmenting wholesale partners to serve sport-specific consumers across channels and price points.

  • Nike Direct: Showing early signs of being a more premium destination, especially when tied to sport moments or product launches.

  • Wholesale Partnerships: Prioritizing and investing in wholesale businesses, strategically adding distribution points. Examples include Dick's (24/7 training) and JD (Air Max 95), showing elevated presentations and increased sell-throughs.

  • New Partnership with Amazon: Will carry a select assortment of footwear, apparel, and accessories, with a featured brand store focusing on running, training, basketball, and sportswear, launching Fall 2025. This is expected to be a small contributor initially.

• Reclaiming Brand Voice: Heavy investment in big sport moments and key product launches. Strong athlete relationships and influence highlighted by moments with Faith Kipyagan, Rory McIlroy, Scottie Scheffler, A'ja Wilson, Shai Gilgeous-Alexander, Carlos Alcaraz, and Jannik Sinner.

• Team Culture: Reclaiming the voice in sports has re-energized the team culture.

• Leadership Structure: Flattened leadership structure with changes to 11 of 15 direct reports.

Geographic Performance & Progress:

• North America: Q4 revenue declined 11%. Made meaningful progress cleaning the marketplace and repositioning Nike Digital as a full-price model. Sportswear declined due to nearly 40% reduction in classic footwear franchises. Performance also declined, but new running and training products saw strong sell-through. Inventory actions continued with higher returns and discounts.

• EMEA: Q4 revenue declined 10%. Furthest along in marketplace cleanup and Nike Digital repositioning. Growth in key performance dimensions (running and training) and diversification of sportswear. Sportswear grew overall in wholesale in Q4, and women's sportswear footwear returned to growth.

• Greater China: Q4 revenue declined 20%, largely in line with plans. Executed a deeper inventory reset. Traffic remains challenged, and the priority is to refresh local monobrand store concepts and elevate brand presentation through sport. Running returned to growth, offset by declines in sportswear and Jordan. Full recovery will take time due to unique marketplace characteristics.

• APLA: Q4 revenue declined 3%. Mixed results across countries, with further work needed to clean inventory. Performance business returned to growth (running and training), offset by declines in sportswear and Jordan.

Tariff Impact and Mitigation:

• Newly issued tariffs represent a new and meaningful cost headwind. Nike has historically been a top payer of U.S. duties (mid-teens average on footwear imports).

• Estimated gross incremental cost increase of approximately $1 billion.

• Mitigation actions:

  1. Optimizing Sourcing Mix: Reallocating production away from China (currently ~16% of U.S. footwear imports from China, expected to reduce to high single-digits by end of FY26).

  2. Partnering with Suppliers & Retailers: Mitigating structural cost increase to minimize consumer impact.

  3. Surgical Price Increases: Phased implementation beginning Fall 2025 in the U.S.

  4. Corporate Cost Reduction: Will evaluate as appropriate, but highest priority is reigniting brand momentum.

• FY26 Financial Impact: Expected to be approximately 75 basis points negative to gross margin, with a greater impact in the first half. Confident in full mitigation over time as actions annualize.

FY26 Outlook & Financial Guidance (Q1 FY26):

• Overall Outlook: Momentum is building in new product franchises. The holiday order book is up versus prior year (growth in North America, EMEA, APLA, partially offset by Greater China).

• Classic Footwear Franchises: Significant progress managing down classic footwear franchises in FY25 (down 20%+; Q4 down 30%+). Expect headwinds to continue through H1 FY26, with Air Force One stabilizing but larger reductions for the Dunk.

• Digital Traffic: Expected to be down double digits in FY26 as Nike Digital is repositioned as a full-price model.

• SG&A: Expected to grow low single digits in FY26 due to investments in demand creation and sports/commercial offense.

• Share Repurchases: Moderated in the near term due to dynamic environment and Win Now actions' impact.

• Q1 FY26 Guidance:

  • Revenues: Expected to be down mid-single digits.

  • Gross Margins: Expected to be down approximately 350 to 425 basis points, including about 100 basis points negative impact from new tariffs.

  • SG&A: Expected to be up low single digits.

  • Other Income and Expense: Zero to $10 million.

  • Full-Year Tax Rate: 19-20%.

Long-Term Vision:

Nike believes it can return to sustainable, profitable growth and ultimately achieve double-digit operating margins by implementing the "Win Now" actions, leveraging its sport offense, and maintaining disciplined expense management. The company emphasizes its strong balance sheet and competitive advantages in the industry.