NIKE, Inc. (NKE) on Q2 2021 Results - Earnings Call Transcript

Operator: Good afternoon, everyone. Welcome to NIKE, Inc.’s Fiscal 2021 Second Quarter Conference Call. For those who want to reference today’s press release, you will find it at investors.nike.com. Leading today’s call is Andy Muir, VP, Investor Relations. Before I turn the call over to Ms. Muir, let me remind you that participants on this call will make forward-looking statements based on current expectations and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in the reports filed with the SEC, including the annual report filed on Form 10-K. Some forward-looking statements may concern expectations of future revenue growth or gross margin. Andy Muir: Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE, Inc.’s fiscal 2021 second quarter results. As the operator indicated, participants on today’s call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release, which was issued about an hour ago or at our website, investors.nike.com. Joining us on today’s call will be NIKE, Inc.’s President and CEO, John Donahoe; and our Chief Financial Officer, Matt Friend. Following their prepared remarks, we will take your questions. We would like to allow as many of you to ask questions as possible in our allotted time, so we would appreciate you limiting your initial questions to one. In the event you have additional questions that are not covered by others, please feel free to re-queue and we will do our best to come back to you. Thanks for your cooperation on this. I’ll now turn the call over to NIKE, Inc. President and CEO, John Donahoe. John Donahoe: Thank you, Andy, and hello and happy holidays to everyone on today’s call. Before I get into our Q2 performance, I want to acknowledge the global environment right now. We continue to deal with the COVID-19 pandemic with surges across the U.S. and in many countries around the world. In fact, consistent with social distancing norms Matt, Andy and I are doing this call from our homes. So, if this audio sounds a little different, that’s why it’s in the Zoom world. And we’re feeling optimistic, with positive news on vaccines, but in the meantime, we hope everyone stays safe out there. Looking at Q2, our strong business results reflect our relentless focus on our objectives. I’m going to talk this quarter about the same themes I talked about last quarter. And most probably next quarter, I’ll talk to you about them again. The reason for this consistency is that our strategy is sound. Our strategy is working. And we’re excited by what we’re seeing as we continue to execute it. Matt Friend: Thank you, John, and hello, and happy holidays to everyone. As I said in our last call, NIKE is recovering faster, fueled by our unparalleled brand momentum and sharp focus on operational execution. Consumer engagement with our brands continues to grow in frequency and depth through the power of our product franchises and fresh storytelling delivered through improved digital and physical experiences. Our financial results in the second quarter and for the first half of fiscal ‘21 are proof that NIKE has recovered and is moving forward. We have a new consumer offense and a clear vision for how we will engage and serve consumer demand for our brands through digital, leveraging a technology-enabled operating model, which is being built for greater speed, efficiency and effectiveness. While uncertainty due to the global pandemic persists, our teams are now better equipped than ever to navigate through the dynamics we face. We continue to leverage our operational playbook and we learn more every week. Our leadership momentum and trajectory in Greater China is helping to shape decisions we are making around the rest of the world. Our teams are sharply focused on the key metrics that matter most to accelerate the pace of our recovery and return to sustainable, profitable growth. In June, we set clear measures of success for the first half of this fiscal year, and now six months later, we’ve exceeded those goals. Let me share a few of the highlights. We said inventory would return to a healthy and normalized level by the end of Q2. And now, through intentional supply and demand management actions, marketplace health has been restored across all geographies without compromising the value of our brands and product franchises. And NIKE-owned inventory is clean, ending Q2 down 2% versus prior year while delivering 9% revenue growth on a reported basis. Operator: Our first question comes from Adrienne Yih with Barclays. Your line is open. Adrienne Yih: Good afternoon. And congratulations on the progress, really nice to see the inventory ahead of plan. So, just sticking with that thematic on inventory. I was wondering if you can talk about the quality or the mix of the inventory entering this next quarter. Are the promotional aspects of it behind, were they -- was the promotional piece of the business in the sub-$100 category, or were there any characteristics that we can glean from the promotional activity? And then, as you look forward to the inflection, sort of the global reopening, how are you thinking about the capacity to chase inventory, particularly in the high heat product? Thank you very much. Matt Friend: Sure, Adrienne, and thanks for your question. As a starting point, as we mentioned several quarters ago, our focus has been on managing supply and demand. And we talked specifically about our focus of trying to normalize inventory by the end of the second quarter. And so, the work that we’ve done around the world, not only to cut supply but also to work with our marketplace partners and to try to capture and drive demand over these past six months has been significant in order to be able to put us in this position that we’re in today. I mentioned in my remarks that we’ve seen markdown levels, which continue to be worse than the prior year, but better than we had anticipated and better broadly than what we’re seeing across the rest of the marketplace, indicative of the strength of our brand. And so, as we finish this quarter, the health of our inventory and the health of the inventory across the broader marketplace is exactly where we were hoping for it to be. As we look forward, we’re obviously still in the midst of a pandemic. And so, I’ve said a couple of quarters in a row now that we continue to take a cautious approach to supply and demand management as we look at the second half. We’re still in a pandemic, and we know things won’t be linear until we see the pandemic and the virus under control or contained. And so, what we’ve been focused on is ensuring that we protect the value of our brands and our product franchises, and ensure that we set the Company up for healthy growth and profitability in fiscal year ‘22 and for the years after that. So, that’s really been what’s guiding our approach. I did mention the Express Lane in my remarks, and it’s a tool that we’ve been using around the world that’s almost 20% of our business today. It’s not equally 20% across every geo. It’s largest in EMEA, as we’ve been talking about for several quarters. And it’s absolutely a useful tool for us that we continue to intend to use to grow as a larger portion of our business but also as a really critical lever to be able to manage supply and demand as we’re reading the marketplace on a weekly basis. So, that’s going to end up being a critical component of our future as we look forward in a much more responsive way than the way we’ve been able to operate in the past. As far as High Heat product and those things, we’re managing those styles and those franchises the same way we manage the rest of our franchises. And so, we continue to have plans, and we use those as great tools to create brand energy in the marketplace, but also to give consumers what they love. And we’re not managing those franchises any differently than we would manage any other franchises in this time. We’re managing them for the long term, and that’s what we will intend to do in the second half. Operator: Our next question is from Bob Drbul with Guggenheim. Your line is open. Bob Drbul: I guess, the first question that I have, I guess, when considering the call date, what were the gating factors between choosing Friday evening or Saturday morning? John Donahoe: Well, we called to your assistant and we asked her whether -- when you would be most available, and she thought that this would be a better time. Bob Drbul: Always, I wouldn’t miss it, wouldn’t miss it. So, I guess, the other question that I have is, can you -- in Europe specifically, the play between some of the lockdowns in the various countries and your digital and your bricks-and-mortar, can you just talk about how that’s really materializing? And if you could maybe just talk through a little bit here in the U.S., what you’re seeing in some of the markets where the virus is spreading and impacting the stores over the last few weeks? Thanks. Matt Friend: Sure, Bob. So, what I would say is, is that the situation has been dynamic since March. And we’ve watched wave after wave of the pandemic hit different markets and different time lines around the world. And really, the only marketplace where we’ve seen continued sort of trajectory in terms of managing the virus has been China. But we expect the marketplace to continue to be pretty dynamic. I think, I mentioned that we’re seeing waves of more restrictions happening across Europe and in parts of the U.S. And we’re expecting that the situation is going to continue to be unique here as we finish the holiday season and enter into the later part of winter. However, we are looking at and have raised our guidance to low-teens revenue growth because we feel like the momentum that we have, the brand strength and the playbook that we’re employing is giving us confidence that we can continue to manage through this. As it specifically relates to what we’re seeing now, our retail sales across the marketplace for holiday have continued to track very well versus the prior year. But in Europe, where we’re seeing more restrictions of shutdowns, physical retail continues to be the area where we’re seeing the largest impact. Stores continue to open and close on different cadences. They have to manage through traffic capacity constraints. And at this point in time, as of today, about 80% of our stores are open in EMEA, but many of them are still operating under modified and/or reduced hours. So, the situation is dynamic, to say the least. We’re also watching carefully potential bottlenecks in the supply chain. And to-date, we’ve been able to continue to meet EDDs with consumers on our digital business. And we’re leveraging the relationships that we have with carriers and otherwise in order to manage our business through this time. But, it’s definitely something that we’re watching, Bob, and it’s dynamic. I guess, where I’d probably finish is just to say that we know the path isn’t going to be linear, and we’ve been saying that for several quarters. But, we think we’re better positioned at this point to manage through the uncertainty probably than we were prior to the pandemic. We’ve learned so much over the last nine months. And the way that we’re operating as a team gives us a lot of confidence that we can continue to manage through this. And as I said earlier, we’re just -- we’re focused on setting a strong foundation for growth and profitability in fiscal year ‘22 and beyond. And so, we’re making decisions in the midst of the uncertainty here to do that and to position ourselves to accelerate once the pandemic is behind us. John Donahoe: And Matt, maybe two things I’d just add on. One is just a shout out to our stores, our direct team and our stores team who have just been -- just amazing through this period of the open-close, open-close. Our store athletes, our frontline store athletes, our entire stores team and our supply chain and distribution team, they have been sort of the unsung heroes I think through what has been a very dynamic time. And as Matt said, while we’re opening and closing physical retail, digital is open 7 days a week, 24 hours a day. And what’s fascinating to watch is the consistency of the growth across digital. And so, I think there’s -- we have increasing evidence that when a consumer wants to get something, if physical retail is closed, they’re coming to us digitally, and our ability to reach consumers digitally in a variety of manners is just getting better and better as this pandemic goes on. Operator: Our next question is from Michael Binetti with Credit Suisse. Your line is open. Michael Binetti: Hey guys. Thanks for all the detail here today and taking our questions, and congrats on a nice quarter. On -- I want to ask you, John, on North America, on wholesale. I think you mentioned -- or I guess, Matt, you mentioned down 14% in the quarter, a bit of a deceleration from last quarter. And you did talk about accelerating the strategy and transforming the end markets, but I know there was a very purposeful focus on getting the inventories aligned. So, I’m curious, as you look at the North America wholesale outlook, is second quarter -- is it smart to think that that might be the peak of the pullback in the near term and that drag gets a little better from here with the inventories more aligned, or would you say that to think about it still being down at that level as you go forward as you kind of keep working on the marketplace? Matt Friend: Sure, Michael. I’ll take that. And then, John, if there’s anything you want to layer in here, please do. Yes. So overall, wholesale was down 14% in the quarter, and we referenced that we had to make some real-time decisions in the quarter in order to address the realities of the situation in the marketplace. And I think in the last call, I said something along the lines of -- or maybe it was two calls ago, I said something along the lines of, as we were adjusting forward-looking supply, we took a more aggressive action in North America because we did not believe the recovery curve in North America was going to look the same is what we expected to see in China, Asia or even in Europe, given the way that we were seeing differences in response to the -- different countries’ response to the virus. And so, when we got close to the second quarter and into the second quarter, we had to make some decisions about how to allocate that inventory, and we focused it on our strategic partners and serving consumer demand through NIKE Direct. And so, we saw a greater reduction in undifferentiated wholesale. As we look forward, we’re going to be more aggressive in adjusting our plans with undifferentiated wholesale. But, what I would tell you is, is that we believe that we and our partners are very well-positioned to capture demand that gets dislocated from changing the profile and the shape of the marketplace. And so, I think looking at this quarter, I think this quarter was more indicative of the way we manage supply and demand in the face of the pandemic and the challenges that that created in the short term versus it’s an indication of trend for that line of channel of business. Okay? But, as we look forward, we are going to be more aggressive with larger undifferentiated customers that we have been working with. And we’re working closely with our strategic wholesale partners in a city-by-city, mall-by-mall, street-by-street basis to work together to determine how we’re going to recapture that demand. And that’s absolutely our plan because we believe longer term, as we’ve said before, we believe that a premium, consistent experience for consumers across the marketplace connected to digital is the type of market foundation that we think we need as a premium brand to create and to be the foundation for long-term growth in the North America marketplace. Michael Binetti: Can I just follow that with a question on China? And it’s nice to see the margin -- the EBIT margin there return back to expansion in the quarter. Some of our work suggests there’s quite a bit of inflation in that market in areas like freight, but more so in marketing and CAC digital, customer acquisition cost. Does the top line trajectory there offset a lot of that inflation? Are the prior peak margins that we saw in that market still attainable, or is it -- do you feel like that market, more appropriate to focus on profit dollar growth and margin expansion back to historic levels as we kind of come past COVID here? Matt Friend: Yes. I mean, it’s a great question. And as we’ve been working our way out of COVID in China, the thing that we’re just reminded of is how large of a market opportunity that is for us, and we continue to see it again this quarter. We’re not able to meet the full demand that we see in that China marketplace. And we continue to see the strength of our brand increasing quarter after quarter after quarter. I think that as it relates to cost, we’ve been in a really high -- we’ve been driving -- and forgive me for forgetting the number, but in the 10s, the 20s of quarters of double-digit growth in that Greater China marketplace, and we’ve done it while maintaining a very strong profit profile. So, what you saw over the last two quarters was more indicative of us working through the dynamics in China with inventory and those things as a result of managing through COVID versus there being an underlying theme of profit erosion long term. I think, we believe that the China marketplace continues to be a great opportunity for us. And we manage the business top to bottom, Michael. So, we’re looking at pricing. We’re consistently looking at opportunities to grow the business in dimensions where we have less of share. But, we’re really pleased to see the growth in our market share in that marketplace, and we believe that profits will continue to grow at an accelerated rate over time. John Donahoe: Matt, what I’d just add on to that is the strength of our brand in China, both NIKE and Jordan, very, very strong. And I think that is partly what’s driving the share gain there. Operator: Our next question is from Kimberly Greenberger with Morgan Stanley. Your line is open. Kimberly Greenberger: Okay, great. Thank you so much. That digital growth is really impressive and sustaining at such a high level consistently. I’m wondering do you think that’s a function of just the additional digital touch points you’ve acquired this year or a more savvy digital marketing strategy. I’m just wondering if you could hypothesize about some of the drivers there. And, when you take a look at that digital P&L, I think, you mentioned over 100% growth, for example, here in North America or in the U.S., helped by the new LA regional service center. Are you hitting the point where you’re starting to see a sort of inflection in your incremental margins in that business, either for scale or because of some of the unlocks, like in that regional service center? John Donahoe: Matt, maybe why don’t I take the first part of Kimberly’s question and you take the second? Matt Friend: Sounds good. John Donahoe: So, Kimberly, yes, our digital business has been experiencing tremendous growth, 80% globally, 100% in the U.S. Our Nike App grew 200%. Our Nike mobile app grew 200% this quarter. And I think what’s underlying that is that digital is the new normal in consumer behavior, and we believe the trends that we’re seeing are here to stay. In fact, as we’ve said now in a couple of quarters, we believe that we’ve well passed the 30% of our overall business, and we think it will be more in the range of 50% in the near future. And it’s an area we have a clear lead. When you ask about what’s driving it, again, we go back to a simple mindset, through the eyes of the consumer, which is consumers want to get what they want, when they want it, how they want it. And that means, obviously, great digital experiences mobiley, through our apps, SNKRS and others online, but also consumers actually, they don’t differentiate digital and physical in the same way they used to. So, they may want to buy online, pick up on store. They might buy online, have it shipped from store. They may want to go try it on and then have it shipped home. And so, we are driving our digital transformation end-to-end, right? So, yes, it’s impacting our digital experiences. No doubt that’s getting better and better and better where it’s better searched, better -- the digital experiences are getting better each quarter. I’ll come back to membership, which I think is key. As Matt said, we’re building out our stores, working with our strategic partners that offer that consistent, seamless experience that consumers expect. And frankly, the supply chain, don’t underestimate the impact of this digital on translating our supply chain. Matt talked about we’ve done in Greater China. 300% increase in digital fulfillment capacity in North America, 400% in EMEA. Robots played a huge role. Over 1 million boxes shipped by robots and the productivity that comes with that. So to be a great digital company, you’ve got to be end-to-end. But I would say, if there’s one thing I’d highlight is the backbone’s membership, right, having a direct connection with consumers. And we are growing our membership. And it’s simple. How do we bring more people into the top of the funnel and establish a direct connection with them? How do we engage them? Engage them through engaging, whether it’s NIKE Running Club, NIKE Training Club, SNKRS app, live streaming is a way to engage consumers. And what we know is more engaged consumers buy more. And one of the most, I think, exciting things we saw in the quarter was these Member Days where it’s really the first time we have really targeted our members, provided more personal recommendations. We’ve allocated scarce product for them, offered them first access. And the conversion rates were very impressive. And so, I think this is a virtuous cycle that we get better and better at the whole membership funnel, the full funnel that we can have a more direct connection with consumers, we can offer more personalized and targeted offerings. I think, the opportunity to expand with women digitally is significant. So, it’s no one thing. And I learned this from my days in the digital world. It’s a lot of little things that make a difference to be a great digital company. And we’re a clear leader here. I think, we’re extending our market share lead digitally and we’re going to continue doubling down. Matt, do you want to take the second piece of Kimberly’s question? Matt Friend: Yes, sure. I’ll just jump in on the second piece. I guess, what I’d say, Kimberly, is your question specifically about the regional service center, John sort of hit it, I mean, our focus at the start is capacity. We needed more capacity because we were watching demand shift rapidly to digital. And so, not only did we open that regional service center in LA, but we leverage omnichannel capabilities in our existing distribution centers in order to be able to do the 300% or 400% increase in volume that John referenced to fuel that business. As I think about the impact on the financial model, and I’ve probably said this a couple of times before, but I’ll use a frame that John just used, getting consumers what they want, where they want and how they want. We’re investing in technology and the supply chain so that we can better predict where to put inventory, where we think consumers want the inventory. And the benefits for us in that are in gross margin. It’s more full price realization. It’s lower cost to fulfill. And frankly, it’s better for the environment because it’s less shipping and it’s less moving stuff around. So, it’s better. We’re investing in technology to create O-to-O capabilities in the marketplace. And while we don’t have the largest store footprint today that -- relative to maybe pure vertical retailers, we are investing in stores with the intentionality of having stores in more places with O-to-O capabilities with capabilities like buy online, pick up in store; more pickup points; shipping from store; shipping to store, so that we can serve that demand more closely to consumers, again, lower cost, better for the environment, better sustainability. And then, I guess, the last thing I’d probably hit on, and John referenced it vis-à-vis member days and the member funnel, we’re spending -- we’re investing a lot of money in digital marketing today. But the marketing -- the opportunity that we see with greater acknowledgment of who our consumers are and how they shop across the marketplace is more personalization and it’s a greater return on those marketing dollars because we’re moving deeper into the funnel. We know who those consumers are. And we have the ability to react and reengage them at a lower cost to us or a lower acquisition cost, which should improve, either create leverage in our demand creation over time and/or enable us to use the dollars that we’re using to drive a greater revenue plan. So, those are some of the things that we’re excited about. Those are -- are we seeing the fruit of it today? We’re starting to. But what you are seeing, Kimberly, is we can see more clearly though where the biggest pockets of opportunity are. And that’s where we’re focused and that’s where we’re investing to create capability, so that we can drive these outcomes as we look several years out. So, this is where we’re focused as a team. And it’s what’s going to fuel our financial model over the next several years. Operator: Our last question is from Paul Trussell with Deutsche Bank. Your line is open. Paul Trussell: Happy holidays, and great team quarter, team. John Donahoe: Thanks, Paul. Paul Trussell: I wanted to ask about margins. Maybe a little bit more detail and color on the factors impacting both GPM and SG&A, both in terms of the second quarter and also your second half guidance. In particular, I would love to hear a little bit more about demand creation, which was obviously down double digits this quarter, and sounds like it’s going to inflect up a bit, and then, also the profile of profitability of your DTC and digital business, right? Obviously, that’s accretive. But certainly, to the extent that you are scaling obviously meaningfully on the top line, and also earlier, you highlighted that you’re finding ways to reduce per unit fulfillment cost. I’m just wondering to what extent is that channel’s margins actually seeing improvement overall. Thank you. John Donahoe: Now, Matt, that is a great last simple question for the year. And I’m going to give you full permission to answer that in a very concise manner. Matt Friend: Well, I guess, where I’d start, Paul, is when we look at our margins in the second quarter, we’re very-pleased with where gross margin performance landed. We said gross margin in the short-term would be more of a function of how we manage supply and demand. And so, we were more focused on the quality and health of our franchises and restoring inventory levels. And that’s ultimately what drove -- that’s ultimately what drove our operating plan for the last six months. We’re probably even more so pleased with the speed of recovery because it puts us in a position now where we can look forward and say, how do we want to manage the business as we move forward. And as I said earlier today, we’re incredibly focused on the things that are required in order for us to achieve that vision of Consumer Direct Acceleration. So, as we look ahead, our gross margins are going to be roughly flat is what our guidance is for the third quarter. And that’s another quarter of sequential improvement in margin. That’s being driven by a higher full price mix in the third quarter and lower discount activity. And that’s going to be offset to some degree by factory store liquidation that we talked about last quarter, where we’re still planning for more markdowns in that specific channel. Because we continue to see traffic lagging behind the prior year in that specific channel, so that we can keep conversion rates up. In the third quarter, I should also say that we’re going to -- we’re expecting to see about 55 basis points of FX headwinds. So, we had about 30 per quarter in the first two quarters of this year, and we’re expecting 55 basis points in Q3. And so, FX adjusted, the margin looks even better, sequentially. And what I’d say maybe as just a little side point on this is that we think third quarter will end up being the trough on FX for us. So, we started to see benefits in translation on the top line. But FX has continued to be a headwind in EBIT through the second quarter, will be through the third quarter, and it will lessen as we get into the fourth quarter. And then, that’s where we expect to start to see some inflection from a weaker U.S. dollar and strong growth outside the U.S. So, I think that’s probably where I’ll stop. And I know our team can follow-up with you with more questions specifically on the modeling. But, thanks, and happy holidays. Andy Muir: Thank you, Paul. John, were you going to say something? John Donahoe: Just, Andy, Matt and I and Andy want to extend happy holidays to everyone on the call. Thank you for doing the call on a Friday afternoon. Hopefully, this frees up a little of your holiday week next week. And please, everyone, have a very safe and happy holiday. And thanks again to all the NIKE teammates around the world for incredible teamwork, resilience and commitment this year. Happy holidays. Andy Muir: Thank you, all. Operator: This concludes today’s conference call, and you may now disconnect.
NKE Ratings Summary
NKE Quant Ranking
Related Analysis

Nike (NYSE:NKE) Price Target and Quarterly Performance Overview

On October 1, 2025, Stifel Nicolaus set a price target of $68 for Nike (NYSE:NKE). At that time, Nike's stock was trading at $69.73, which is about 2.48% higher than the target. Nike, a global leader in sportswear and equipment, competes with brands like Adidas and Under Armour. The company is known for its innovative products and strong brand presence.

Nike recently experienced a 3.5% increase in after-hours trading, driven by its impressive quarterly performance. The company reported diluted earnings of $0.49 per share, surpassing Wall Street's forecast of $0.27. Revenue for the first quarter rose by 1% to $11.7 billion, slightly above expectations. Wholesale sales increased by 7% to $6.8 billion, although sales from Nike Direct stores and its website declined by 4%.

Despite a 1% reduction in selling and administrative expenses, Nike's gross profit margin fell by 320 basis points to 42.2%. This decline was due to lower average selling prices from increased discounts and higher tariffs in North America. CEO Elliott Hill emphasized the company's strategic actions in key areas like North America and wholesale, noting the need for continued progress across all sports, geographies, and channels.

Nike's Q1 2026 results indicate early signs of a turnaround after challenging quarters. The company's revenue base is stabilizing, and margins show resilience. Sequential profitability improvement supports the recovery narrative. Initiatives like "Win Now" and "Sport Offensive" are refocusing the brand on athletes and sport-specific strategies, reversing previous missteps.

Despite the positive earnings surprise, concerns remain about Nike's growth quality. Margins continue to compress, and the direct-to-consumer segment weakens. While wholesale momentum and inventory relief offer some progress, challenges persist with the Converse brand and in the Chinese market. Nike's valuation remains high at about 35 times forward EPS, offering little margin of safety for investors.

NIKE, Inc. (NYSE: NKE) Faces Market Challenges and Strategic Shifts

  • The consensus price target for NIKE (NYSE:NKE) has decreased to $77.75 from a high of $85.20 last quarter.
  • Analysts forecast a significant decrease in earnings and revenue in the upcoming earnings report, with expectations of 26 cents per share on revenue of $10.99 billion.
  • Despite current challenges, analyst Tom Nikic from Wedbush sets an optimistic price target of $139 for NIKE, highlighting the potential upside based on strategic initiatives.

NIKE, Inc. (NYSE: NKE) is a leading global brand in athletic footwear, apparel, and equipment. Known for its iconic trademarks like Jumpman and Converse, NIKE sells its products through retail stores, digital platforms, and independent distributors. The company faces competition from other major brands like Adidas and Under Armour in the athletic wear market.

The consensus price target for NIKE has seen a decline over the past year. A year ago, the average price target was $83.54, which increased to $85.20 last quarter. However, it has recently dropped to $77.75. This trend may be influenced by recent market conditions and company performance, as highlighted by the stock's current trading price of $68, a 12.85% decrease from its August peak.

NIKE's upcoming earnings report is a focal point for investors, as it is expected to provide insights into the company's turnaround efforts. Analysts forecast earnings of 26 cents per share on revenue of $10.99 billion, a significant decrease from the previous year's earnings of 70 cents per share and $11.61 billion in revenue. This anticipated decline may have contributed to the lowered price targets.

Despite these challenges, analyst Tom Nikic from Wedbush has set a price target of $139 for NIKE, indicating potential upside from its current trading price. This optimism is supported by NIKE's strategic initiatives, such as its "Win Now" strategy, which aims to optimize inventory levels and enhance branding efforts. The strategy is expected to improve sales and create a more favorable revenue mix.

NIKE's stock performance is also affected by broader market conditions, including supply chain disruptions and changing consumer behavior. As the company prepares to release its fiscal Q1 2026 earnings, investors are advised to monitor key areas such as sales performance in China, effective inventory management, and the impact of U.S. tariff policy on profit margins.

Nike (NYSE:NKE) Quarterly Earnings Preview

  • Analysts predict an earnings per share (EPS) of $0.28 and revenue of approximately $10.98 billion.
  • Nike faces year-over-year decline in earnings and lower revenues for the quarter ending August 2025, adding uncertainty.
  • The company's financial health is highlighted by a P/E ratio of 32.54, a debt-to-equity ratio of 0.83, and a current ratio of 2.21.

Nike (NYSE:NKE) is gearing up to release its quarterly earnings on September 30, 2025. Analysts predict an earnings per share (EPS) of $0.28, with revenue expected to reach around $10.98 billion. As a leading player in the athletic apparel and footwear industry, Nike's performance is closely monitored by investors and analysts, especially given its competition with brands like Adidas and Under Armour.

Investors are particularly attentive to Nike's upcoming earnings report, as it could significantly impact the stock's price. Despite facing cyclical risks and modest growth, Nike is anticipated to surpass earnings estimates. However, expectations of a year-over-year decline in earnings and lower revenues for the quarter ending August 2025 add a layer of uncertainty. The management's discussion during the earnings call will be crucial in assessing the sustainability of any immediate price changes.

Historically, Nike has experienced slow and steady growth in revenue and cash flow. However, this growth has been complicated by stock buybacks at unfavorable prices and economic cycle disruptions. The company's free cash flow levels suggest that its fair value is approximately at the current market price. A true margin of safety for investors is suggested to be below $45 per share, indicating potential caution in investment decisions.

Nike's financial metrics provide insight into its market position. With a price-to-earnings (P/E) ratio of 32.54, investors are willing to pay a premium for each dollar of earnings. The price-to-sales ratio of 2.26 and enterprise value to sales ratio of 2.34 reflect the value placed on each dollar of sales. The enterprise value to operating cash flow ratio of 29.29 highlights the relationship between the company's valuation and its cash flow from operations.

Nike's financial health is further illustrated by its earnings yield of 3.07%, offering a return on investment relative to its share price. The debt-to-equity ratio of 0.83 indicates a balanced approach to financing its assets. Additionally, a current ratio of 2.21 suggests Nike's strong ability to cover short-term liabilities with short-term assets, providing a stable financial footing as it approaches its earnings release.

Nike, Inc. (NYSE:NKE) Sees Positive Shift in Market Sentiment

  • Argus Research upgraded Nike, Inc. (NYSE:NKE) to a "Buy" rating, indicating a bullish outlook for the stock.
  • Nike's stock surged nearly 15% following its fourth-quarter earnings report, despite a decline in revenue and profits.
  • Analysts are optimistic about Nike's recovery and future growth potential, reflecting a positive shift in market sentiment.

Nike, Inc. (NYSE:NKE) is a global leader in the design, development, and marketing of athletic footwear, apparel, equipment, and accessories. Known for its iconic "Swoosh" logo, Nike competes with other major brands like Adidas and Under Armour. The company has a strong presence worldwide and is a key player in the sportswear industry.

On July 6, 2025, Argus Research upgraded Nike's stock to a "Buy" rating, with the stock price at $76.39. This upgrade, reported by Benzinga, highlights Nike as a top large-cap gainer in the previous week. The upgrade comes amid a significant boost in Nike's stock, which has provided investors with renewed optimism.

Nike's stock experienced a remarkable surge of nearly 15% in a single trading session following its fourth-quarter earnings report on June 26. Despite a 12% decline in revenue and an 86% drop in profits for the quarter, the market's reaction was positive. Investors seem to be focusing on a potential comeback story for Nike, looking beyond the disappointing historical data.

Analysts have begun upgrading their outlooks on Nike, suggesting a belief that the company has overcome its challenges and is on the path to recovery. This shift in sentiment is supported by new signs of stability and control within the company. The positive market response reflects not only Nike's headline results but also the potential for future growth.

Nike's current stock price is $76.39, with today's trading range between $75.58 and $77.03. Over the past year, the stock has reached a high of $90.62 and a low of $52.28. With a market capitalization of approximately $112.75 billion and a trading volume of 12,022,568 shares today, Nike remains a significant player in the market.

Argus Upgrades Nike to Buy, Stock Gains 3%

Argus has upgraded NIKE (NYSE:NKE) to Buy from Hold, setting a price target of $85, citing signs of an ongoing recovery fueled by inventory normalization, improved pricing through e-commerce, and the company’s continued brand dominance. Following the upgrade, the company’s shares rose more than 3% intra-day today.

The firm noted that after aggressively clearing excess inventory in the second half of fiscal 2025, Nike’s product lineup is now more current and resonating better with consumers. Additionally, Nike is leveraging its direct-to-consumer and online channels to strengthen pricing power, supporting margins as demand stabilizes.

Argus remains bullish on Nike’s long-term prospects, emphasizing its leadership in the athletic apparel and footwear markets, bolstered by strong marketing, athlete endorsements, and a powerful brand that commands premium pricing, especially in high-end footwear.

While acknowledging the industry’s fierce competition, the analyst expects Nike to capitalize on its global scale, product innovation, and expanding presence in emerging markets to sustain growth. The upgrade reflects growing confidence that Nike’s strategic initiatives will drive a meaningful turnaround and support share price appreciation.

Nike Jumps 18% After Q4 Beat and Signs Turnaround Headwinds Are Easing

Shares of Nike (NYSE:NKE) surged over 18% intra-day today after the athletic giant reported fiscal fourth-quarter results that exceeded expectations and signaled that the worst financial impact from its turnaround plan is likely behind it.

Nike posted Q4 sales of $11.10 billion, down 12% year-over-year but better than analysts anticipated, helped by signs of stabilization in its core running category. North American sales dropped 11% to $4.7 billion, a decline that was milder than feared.

Earnings per share were $0.14, topping the consensus estimate of $0.12. CEO Elliott Hill’s upbeat remarks during the earnings call—highlighting that the business is poised to improve from here—fueled investor optimism. “It’s time to turn the page,” Hill declared.

Executives also outlined plans to shift more production from China to the U.S., aiming to mitigate potential cost increases from broad U.S. tariffs.

Looking ahead, Nike guided for first-quarter revenue to decline by a mid-single-digit percentage, a forecast more positive than analyst expectations for a 7.3% drop. Management noted that Q4 marked the peak of financial drag from its turnaround initiatives, and they anticipate these headwinds to ease going forward.

Nike's Fiscal Fourth Quarter Earnings Overview

  • Nike (NYSE:NKE) reported an EPS of $0.14, surpassing the estimated $0.12, with revenue reaching $11.1 billion against the expected $10.7 billion.
  • Despite a 12% year-over-year revenue decline, the company's performance exceeded analysts' expectations with a net income of $211 million.
  • Under CEO Elliott Hill's leadership, Nike focuses on product innovation and marketing, contributing to its smaller-than-expected revenue decline and ability to surpass profit estimates.

Nike (NYSE:NKE) recently reported its earnings for the fiscal fourth quarter, revealing an earnings per share (EPS) of $0.14, which surpassed the estimated EPS of $0.12. The company's revenue for this period was $11.1 billion, exceeding the estimated revenue of approximately $10.7 billion. This performance indicates strong revenue growth and effective cost management.

Despite a 12% year-over-year revenue decline, Nike's results were better than analysts expected, as highlighted by Visible Alpha. The company's net income fell to $211 million, or 14 cents per share. However, these figures still exceeded Wall Street's expectations.

This quarter marks the third under CEO Elliott Hill, who took over last October. Hill had previously warned that the company's turnaround plan might impact sales negatively in the short term. However, he remains optimistic about the future, stating that the business is expected to improve due to ongoing progress.

Nike's shares experienced a slight decline of about 1% in extended trading following the earnings report. Despite this, the company's strategic focus on product innovation and marketing centered around sports appears to be yielding favorable results. This approach has contributed to Nike's smaller-than-expected decline in revenue and its ability to surpass profit estimates.

Nike's financial metrics provide further insight into its performance. The company has a price-to-earnings (P/E) ratio of approximately 20.64 and a price-to-sales ratio of about 1.93. Its enterprise value to sales ratio is around 2.00, and the enterprise value to operating cash flow ratio is approximately 16.33. Additionally, Nike maintains a debt-to-equity ratio of approximately 0.85 and a current ratio of around 2.19, indicating a strong financial position.