Nike shares slipped Tuesday evening despite the company posting better-than-expected quarterly results. Our patience is running thin on this turnaround story. Total revenue in the company’s fiscal 2026 fourth quarter dipped 1% year over year at $10.97 billion, topping Wall Street expectations of $10.86 billion, according to analyst estimates compiled by LSEG. Earnings per share (EPS) increased 42% from the year-ago period to 20 cents, beating the consensus of 13 cents, LSEG data showed. That figure does not include a 52-cent benefit to EPS from the expected recovery of the IEEPA tariffs — the levies overturned by the Supreme Court earlier this year. NKE YTD mountain Nike YTD The roughly 2% drop after-hours in shares Tuesday is sending Nike to roughly $40 per share. The stock is down about 35% year to date before factoring in the after-hours move. Bottom line We put Nike in the penalty box after the company reported disappointing earnings in March, and the results here are unlikely to improve its standing in the portfolio. While some parts of the business, namely running, have made notable progress over the past year under management’s “Win now” turnaround strategy, the comeback is taking much longer than we anticipated. You could fault management for moving too slowly and not being aggressive enough with rightsizing excess inventory, China remaining a mess, product innovation lacking, or acknowledge that the sportswear competition is larger today than it was a few years ago. However, a tricky macro environment hasn’t been supportive either. The company said it was off to a strong start to the quarter in March, especially in North America. However, outgoing CFO Matthew Friend noted that retail sales decelerated by mid-April. The pressure on the consumer could have been tied to the Iran war- related spike in gas prices, which peaked last month. One positive thing to call out from the quarter is that it sounds like management is finally taking aggressive actions to reduce promotions and improve gross margins. Also, management reiterated its expectation that earnings per share will be flattish year over year starting from this reported quarter through the first two quarters of fiscal 2027 — a three-quarter period. While analyst earnings estimates are still a little bit better than flattish, this guide does not reflect management significantly cutting numbers and resetting expectations once again. That explains why the stock went from being down roughly 9% early in the post-earnings conference call to only down modestly. Management’s decision to prioritize gross margin improvement is a positive development and could earn Nike more patience from Wall Street ahead of its Investor Day in November, which will also feature the company’s new CFO. We believe Nike will eventually regain its footing and return to consistent revenue and earnings per share growth. What remains uncertain is whether that inflection will be as sharp as the market expects….
Read More: After a soft Nike quarter, we have a big decision to make on the stock