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Nike’s Turnaround Clouded by China Slump and One-Time Tariff Boost

A large tariff recovery inflated quarterly profit and hid weak sales, leaving analysts cautious about sustainable demand and the company’s path back to growth.

Overview

  • Nike reported roughly $11.0 billion in fiscal fourth-quarter revenue, down about 1% reported and about 4% on a currency‑neutral basis, while diluted EPS was $0.72 including a one‑time IEEPA tariff recovery worth about $0.52 per share.
  • Excluding the tariff recovery, Nike said underlying earnings were about $0.20 per share, a gap that complicates reading true consumer demand for the brand.
  • Greater China was the largest drag, with revenue falling roughly 17% in the quarter and 13% for the fiscal year, as local competitors and shifting consumer tastes eroded Nike’s share there.
  • Sales trends diverged by channel: wholesale rose about 4% while Nike Direct fell about 7%, Nike Digital fell about 12%, and Nike‑owned stores declined about 7%, raising concerns that sell‑through to shoppers remains weak.
  • Management is pursuing its ‘Win Now’ turnaround with inventory cleanup, margin focus and a shift to wholesale rebalancing, but analysts called the recovery “choppy,” and Bank of America cut its price target to $47 while noting pockets of strength such as multiquarter double‑digit growth in running.