Nike (NKE) reported fourth-quarter earnings of $0.72 per share on Tuesday, exceeding analyst estimates of $0.13 per share, but shares fell 2% in after-hours trading as a 12% decline in China sales overshadowed the earnings beat. The company's China revenue dropped to $1.3 billion from $1.5 billion in the same quarter last year, driven by double-digit declines across footwear, apparel, and equipment categories. Nike's gross margin increased 8.9% during the quarter, largely attributed to an expected tariff refund of nearly $986 million following a Supreme Court ruling that struck down many global tariffs imposed under President Donald Trump's administration.
Nike Reports Q4 Earnings Beat with $0.72 Per Share
Nike reported net income of $1.07 billion, or $0.72 per share, up from $211 million, or $0.14 per share, in the same period last year. The earnings per share figure beat analyst expectations of $0.13 per share as per data from Fiscal.ai. The company's revenue reached $10.97 billion, representing a 1% decrease from the $11.10 billion recorded in the previous year, but exceeded analyst expectations of $10.86 billion. The company did not provide any outlook in its earnings release.
China Sales Drop 12% to $1.3 Billion in Q4
China sales dropped 12% to $1.3 billion in the fourth quarter. Footwear sales in the Mainland fell 13%, apparel sales dropped 10%, and equipment sales fell 17%. Earnings before interest and taxes for the Greater China region dropped 20% to $243 million. Chief Executive Elliott Hill stated, "While we continue to face top-line headwinds, we're encouraged by progress in performance products and are focused on consistent execution, improved profitability and scaling our wins to realize our full potential."
Tariff Refund Boosts Gross Margin by 8.9%
Nike's gross margin increased 8.9% during the quarter. The company attributed this increase to an expected tariff refund of nearly $986 million following the Supreme Court's ruling striking down many of President Donald Trump's global tariffs.
North America Revenue Rises 3% to $4.83 Billion
Revenue in Nike's leading market, North America, rose 3% to $4.83 billion. This figure fell short of the $4.83 billion projected by analysts.
NKE Stock Falls to 10-Year Low at $40.75
NKE shares ended Tuesday at $40.75 per share, marking a new 10-year low. The stock has lost 32% year-to-date.
FAQ
Why did Nike's stock fall after beating earnings estimates?
Nike's stock fell 2% in after-hours trading despite beating earnings estimates because China sales dropped 12% to $1.3 billion from $1.5 billion in the same quarter last year, overshadowing the positive earnings performance.
What caused Nike's gross margin to increase by 8.9% in Q4?
Nike's gross margin increased 8.9% during the quarter largely due to an expected tariff refund of nearly $986 million following a Supreme Court ruling that struck down many global tariffs imposed under President Donald Trump's administration.
How did Nike perform in its North America market during Q4?
Nike's North America revenue rose 3% to $4.83 billion in the fourth quarter, though this figure matched rather than exceeded the $4.83 billion projected by analysts.
