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Nike (NKE) is set to report its fourth quarter fiscal 2025 earnings on Thursday, June 26, amid a period of transition and uncertainty. While the sportswear giant has undertaken a series of turnaround efforts to regain its footing, the results of those strategies are not expected to show meaningful traction just yet. In the meantime, the upcoming earnings release is expected to reflect the weight of ongoing challenges, including intense competition, a sluggish Chinese market, and increased markdown activity.
Notably, Nike’s performance has been sluggish over the past several quarters. Given its weak performance, Nike stock has underperformed the broader markets. Moreover, it is down about 20.5% year-to-date.
For many investors, Q4 results may be less about the actual numbers and more about what lies ahead. The market will closely watch management’s outlook for the fiscal first quarter and how well Nike is positioned to navigate tariff pressures.
With nearly all of its production outside the U.S., Nike remains vulnerable to international trade disruptions and tariff-related cost pressures.
Overall, market sentiment around Nike stock remains cautious ahead of the Q4 report. This means that a weak Q4 print is already factored into Nike’s stock price. However, management’s positive commentary for fiscal 2026 and its efforts around mitigating tariff-related headwinds could lift the stock.
Nike’s Q4 to Remain Challenged
From a financial perspective, Nike’s Q4 will remain weak. The company is likely to report declining sales for its classic footwear lines. Furthermore, traffic across both its direct-to-consumer and wholesale channels is expected to remain soft, and the company may continue to report weakness in China, its key growth market outside the U.S.
Nike’s management has guided for revenues to decline in the mid-teens range year-over-year in Q4, citing headwinds such as unfavorable shipment timing in North America and adverse foreign exchange impacts.
Its margins are likely to remain under stress. Gross margins are projected to fall by 400 to 500 basis points, driven by a mix of restructuring charges, discounts, inventory challenges, and a less favorable product and channel mix.
While Nike has faced significant competitive and macro headwinds, it has shown a knack for beating expectations. Nike has outpaced analysts’ earnings forecasts for four consecutive quarters, including a significant beat in its most recent report.
However, the company’s fourth-quarter earnings are expected to continue declining. Analysts predict earnings per share of just $0.11, reflecting a sharp drop from $1.01 in the same quarter a year ago, as markdowns and softer demand will likely take a toll.
Nike’s Comeback Play
While Nike is facing short-term headwinds, it is taking steps to turn things around. The sportswear giant is focusing on innovation and performance, aiming to refresh its product lineup with a steady stream of new designs and materials, especially in the sports performance segment. Nike is increasing the share of new products in each seasonal drop while carefully managing the presence of its classic models.
On the digital front, Nike is making significant changes. The company is integrating Nike Digital more deeply into its overall marketplace strategy. It’s reducing promotional events and markdowns to protect brand value and shifting clearance inventory to Nike Factory Stores instead of selling it online at steep discounts. As a result, Nike expects digital traffic to dip sharply in fiscal 2026. However, over time, as new products are rolled out and brand marketing intensifies, organic digital traffic is expected to stabilize and rebound.
Nike is also cleaning up the broader retail landscape. For its digital platform, the company is being selective in what it buys and promotes, supporting a full-price sales model. At Nike Factory Stores, deeper discounts will help move larger volumes of clearance inventory. For wholesale partners, Nike is reducing forward supply, supporting sales with fewer returns, and offering better discounts to help them clear older stock. All these efforts will lead to an acceleration in growth.
The Bottom Line for Nike Stock
While Nike is taking steps to regain momentum, its Q4 is expected to reflect ongoing struggles. However, with sentiment cautious and expectations low heading into the report, any positive signals from management regarding future strategy, stabilization in China, or improvements in direct-to-consumer trends could be rewarded by the market.
Wall Street has a “Moderate Buy” consensus rating on Nike stock. Moreover, the average price target of $73.24 reflects decent upside potential of about 22% from current levels.
