In my Nike (NYSE:NKE) earnings preview posted for readers earlier last week, it was noted that CFO Matt Friend’s guidance for Nike’s fiscal Q3 ’25 was grim and the inventory liquidation would likely last through fiscal Q4 ’25 as well. (Fiscal Q4 ’25 ends May 31 ’25).
Here are the new estimates for fiscal Q4 ’25 for Nike after the fiscal Q3 ’25 was reported Thursday night, March 20:
- Revenue est for q4 ’25: $10.68 billion for -15% y-o-y growth;
- Operating income est of $178 million for an 88% y-o-y decline;
- EPS estimate of $0.11 for a y-o-y decline of 89%;
Source: LSEG as of 3/23/25
The gross and operating margins are going to get whacked pretty thoroughly again in Q4 ’25 and then investors will likely see some revenue and margin stabilization thanks to cleaner inventory.
The stock is now discounting much of this financial and operational pain.
The ultimate question for investors then is when to new and innovative products begin to the pipeline, and when will Nike resume meaningful revenue growth ?
Some think investors may not see material revenue growth until fiscal ’27, which begins June 1, ’26.
The technician this blog has used for 25 years to get an informed opinion on a stock or ETF’s technical posture (@Garysmorrow over on X), thinks $60 for Nike is solid technical support.
That’s a 10% drop from here, and certainly reasonable given the amount of bad news that’s been emanating from Nike.
On Monday, March 24th, 2025, while passing a Dick’s Sporting Goods in the western suburbs of Chicago, I stopped in to see how Nike was positioned in the Dick’s footwear section, and Nike is back on full display, versus the visit I paid to the same store about 18 months ago, when I ended up buying two pairs of Hoka’s, since Nike was nowhere to be found on the shelves, and when I asked the floor sales about the brand, there seemed to be no interest in showing my anything from Nike. (This experience can be found in an earlier earnings preview on Nike.)
It’s a start, but that’s all it is for now.
The brand is famous for “it” products and it’s coolness factor, and it desperately needs to restore that image.
Investors are going to need to be patient. I don’t expect anything in the way of actual revenue growth until the end of calendar ’25.
Street consensus is actually looking for 2% EPS growth in fiscal ’26, on flat or 0% revenue growth. If Nike can begin to improve those numbers even slowly, it would definitely help put a floor under the stock.
Many of the negative sell-side comments note the China tariff issue, but Nike’s China division has been “inconsistent” for a while in terms of it’s quarterly results (see the reference to China in the earnings preview). China is a big profit center for Nike given China accounted for 50% of Nike’s total EBIT (earnings before interest and taxes, or what is otherwise known as operating income) this past quarter, thus any tariff news around Nike I would expect the majority of the news to be already discounted in the stock price. China has been a struggle for a while for Nike.
The one saving grace to fiscal ’26 (which begins June 1 ’25) is that the compares will be very easy as Nike begins lapping this very unfortunate fiscal 2025 results.
The footwear and apparel giant needs some product wins and momentum, while investors earn a 3.5% dividend yield for the next 3 – 6 months.
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Disclaimer: None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. Investing can and does involve the loss of principal even for short periods of time. None of the above information may be updated, and if updated, may not be done in a timely fashion.