Nike faces fourth-quarter test as turnaround pressures mount
Analysts expect Nike to post lower quarterly sales as CEO Elliott Hill works to revive growth and manage tariff and China pressures.
By Sofia Marchetti · World Affairs Correspondent
3 min read
Nike is due to release fiscal fourth-quarter results Tuesday afternoon, giving investors a fresh measure of whether its turnaround is gaining ground. CNBC reported that Wall Street is looking for a weak quarter as the sneaker and apparel company tries to restore sales growth under CEO Elliott Hill.
Analysts surveyed by LSEG expect Nike to report earnings of 13 cents a share on revenue of $10.86 billion, according to CNBC. Nike executives are scheduled to discuss the results with analysts at 5 p.m. ET.
The report follows Nike’s earlier warning that sales would decline through the rest of the calendar year. CNBC reported that the company had projected a 2% to 4% revenue drop for the fiscal fourth quarter, compared with Wall Street expectations at the time for a 1.9% increase.
Nike also said last week that the quarter would include a benefit from tariff refunds that had not been built into its prior guidance, according to CNBC. The company did not include that benefit when it issued its earlier forecast.
North America growth, China weakness
Chief Financial Officer Matt Friend told analysts on Nike’s fiscal third-quarter earnings call that the company expected low-single-digit percentage sales declines for the rest of the calendar year, CNBC reported. He said growth in North America would be offset by a steep decline in China.
In the fiscal third quarter, Nike’s North America sales rose 3%, while revenue in Greater China fell 7% to $1.62 billion, according to CNBC. The company’s gross margin was also pressured by higher tariffs in North America during that period.
For the full fiscal year, LSEG analyst estimates cited by CNBC call for revenue of $46.27 billion and earnings of $1.51 a share. Analysts expect revenue of $46.47 billion in the fiscal year ending in May 2027.
Turnaround under Hill
Hill has been working to reposition Nike after a period of weaker sales. CNBC reported that Nike previously cautioned investors that the recovery would be uneven, with different parts of the business improving at different speeds.
Hill has said the areas Nike first targeted for improvement are starting to show momentum, according to CNBC. The company has been trying to rebuild growth while dealing with broader risks, including tariffs, conflict in the Middle East, higher gas prices and weaker consumer confidence.
Friend told analysts on the third-quarter call that Nike could see effects from macroeconomic volatility, including oil-price moves and lower consumer confidence, CNBC reported. “We are focused on what we can control,” Friend said at the time.
Nike has also been cutting costs. CNBC reported that the company in April eliminated 1,400 jobs across the organization, its second workforce reduction of the year.
The company is preparing for a finance leadership change as well. Nike announced last week that David Denton, a former Pfizer executive, will replace Friend as chief financial officer effective Aug. 17, according to CNBC.
Nike has received a marketing lift during the World Cup in North America, despite not being an official sponsor, CNBC reported. Its ads outperformed rival Adidas in social media traction, according to the report.
This story draws on original reporting from CNBC.