Nike Beats Q4 Revenue Expectations as Wholesale Recovery Supports Turnaround Strategy

On June 30, NIKE, Inc. announced its financial results for the fourth quarter and full fiscal year ended May 31, 2026.

Fourth-quarter revenue totaled $11.0 billion, down 1% on a reported basis and 4% on a currency-neutral basis compared with the prior year. Despite the year-over-year decline, revenue slightly exceeded Wall Street expectations, providing a positive signal for the company as it continues its turnaround efforts.

For the full fiscal year, NIKE reported revenue of $46.4 billion, flat on a reported basis and down 2% on a currency-neutral basis. While overall sales remain under pressure, the latest earnings suggest that the restructuring initiatives led by President and CEO Elliott Hill are beginning to gain traction.

Summary

Wholesale Recovery Emerges as a Key Bright Spot

One of the most significant takeaways from the quarter was the continued recovery of NIKE’s wholesale business.

Wholesale revenue reached $6.6 billion during the fourth quarter, increasing 4% on a reported basis and 1% on a currency-neutral basis. Growth in North America helped offset continued weakness in Greater China.

Meanwhile, NIKE Direct revenue declined to $4.1 billion, falling 7% on a reported basis and 9% on a currency-neutral basis. NIKE Brand Digital revenue decreased 12%, while sales at NIKE-owned stores fell 7%.

The results reflect the company’s strategic shift under Elliott Hill. Following former CEO John Donahoe’s heavy emphasis on direct-to-consumer (DTC) sales, NIKE has been rebuilding relationships with wholesale partners as part of its broader business reset. The improvement in wholesale performance suggests that this strategy is beginning to deliver tangible results.

By brand, NIKE Brand generated $10.7 billion in fourth-quarter revenue, remaining flat on a reported basis while declining 3% on a currency-neutral basis. Continued weakness in Greater China and the EMEA region was partially offset by growth in North America.

Converse reported revenue of $244 million, down 32% year-over-year on a reported basis, with declines across all geographic markets, highlighting ongoing challenges for the subsidiary brand.

Tariff Recovery Boosted Profitability

Profitability improved significantly during the quarter.

Gross margin increased to 49.2%, up 890 basis points from the prior year. However, much of the improvement reflected the expected recovery of tariffs under the International Emergency Economic Powers Act (IEEPA), which contributed approximately 900 basis points to gross margin.

Diluted earnings per share reached $0.72, including a $0.52 benefit related to the expected tariff recovery. Net income rose to $1.1 billion, up 407% year-over-year, although a substantial portion of the increase was driven by this one-time benefit.

Elliott Hill: Building the Foundation for Long-Term Growth

Commenting on the results, Elliott Hill said: “In fiscal 2026, we took decisive actions to strengthen the foundation of NIKE, Inc. and reposition our business for long-term growth. We made meaningful structural improvements to lay the groundwork for our Sport Offense across our team culture, innovative product, brand strength, and how we serve consumers in our countries and cities. While we continue to face top-line headwinds, we’re encouraged by progress in performance product and are focused on consistent execution, improved profitability and scaling our wins to realize our full potential.”

Hill’s “Sport Offense” strategy focuses on returning the company to its core strengths as a performance sports brand by investing in product innovation, strengthening brand equity, deepening relationships across key markets, and rebuilding its wholesale network.

Investors Remain Cautious

Despite beating revenue expectations, investor sentiment remains cautious.

NIKE shares have fallen roughly 35% year-to-date as investors continue to look for stronger evidence that the nearly two-year turnaround strategy is translating into sustainable growth. Weakness in Greater China and slowing digital sales remain significant challenges for the company.

Executive Vice President and Chief Financial Officer Matthew Friend also emphasized the company’s disciplined approach to improving its business fundamentals.

“We delivered fourth quarter results in line with our expectations, demonstrating financial discipline in an increasingly challenging operating environment, where sell-through remains challenged. We are improving the health of our business, managing our product portfolio and investing in marketplace elevation, while adjusting our operating costs for greater efficiency over time.”

A Step Forward in NIKE’s Turnaround

For the full fiscal year, NIKE generated $46.4 billion in revenue while net income declined 3% to $3.1 billion. Wholesale continued to outperform, whereas NIKE Direct and digital sales remained under pressure, underscoring that the company’s transformation is still in progress.

Although the latest earnings do not signal a full recovery, they represent an important milestone. Beating revenue expectations and delivering growth in wholesale suggest that NIKE’s turnaround strategy is beginning to gain momentum.

As the company returns its focus to sport, product innovation, brand strength, and strategic marketplace partnerships through its “Sport Offense” initiative, investors and the broader industry will be watching closely to see whether these structural changes can translate into sustainable long-term growth.

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