NIKE, Inc. (NYSE:NKE) shares climbed 4.90% to close at $43.06 on Wednesday, with pre-market trading at $43.26 early Thursday. The stock's gains came despite a mixed earnings report that showed a significant boost from tariff recoveries, masking underlying weakness in North America.
The company reported fourth-quarter earnings per share (EPS) of $0.72, which included a $0.52 benefit from tariff recoveries tied to the IEEPA. Without that one-time lift, adjusted EPS would have been $0.20, still up year-over-year but far less impressive. Gross margin improved to 49.2%, but the tariff recovery accounted for about 900 basis points of that figure, bringing the adjusted gross margin to roughly 40.2%.
North America EBIT jumped 91% to $2.00 billion, but $965 million of that came from tariff recoveries. Excluding that benefit, North America EBIT would have been approximately $1.04 billion, down about 1% from $1.05 billion a year earlier. Total Nike EBIT of $1.32 billion included a $986 million tariff lift, leaving adjusted EBIT at $0.34 billion, up about 13%.
Regional performance was uneven. North America revenue rose 3% to $4.83 billion, while EMEA fell 1% to $2.98 billion. Greater China revenue dropped 12% to $1.30 billion, and Asia Pacific & Latin America edged up 1% to $1.60 billion. Converse revenue plunged 32% to $244 million. Currency-neutral changes were even starker, with Greater China down 17% and EMEA down 6%.
Channel performance showed a shift toward wholesale, which grew 4% in the quarter, while Nike Direct sales fell 7% and Nike Brand Digital dropped 12%. CEO Elliott Hill acknowledged ongoing "top-line headwinds," and CFO Matthew Friend noted that "sell-through remains challenged," tempering optimism about a demand rebound.
Analyst sentiment remains cautious. According to FactSet, there are 24 hold ratings, 10 buys, five overweight calls, and two sells on Nike. The median price target is $47, about 9% above Thursday's pre-market price. FY2027 EPS estimates have been cut to $1.75 from $1.82 a month ago and $1.89 three months earlier. First-half fiscal 2027 revenue is expected to decline at a low to mid-single-digit rate.
New CFO David Denton, previously at Pfizer (NYSE:PFE), will take over on August 17 with a focus on disciplined capital returns. Nike returned $2.5 billion to shareholders in fiscal 2026, mostly through dividends, with only $123 million in buybacks from an $18 billion authorization. The NYSE will be closed Friday, July 3, for Independence Day, putting the next trading session on Monday.
