Bengaluru – Nike forecast a surprise drop in annual revenue, as the sportswear giant’s turnaround struggles to find its footing, in the face of competition and elevated inventory.
The outlook disappointed investors who have grown impatient with chief executive officer Elliott Hill’s nearly two-year turnaround effort to revamp the business by clearing out excess inventory and reviving product innovation.
Nike’s shares have fallen 35 per cent so far in 2026 and were down about 4 per cent in extended trading on June 30 despite the company beating estimates for quarterly results.
Hill, who took the helm of the company in 2024, vowed to refocus Nike on key sports like soccer and running. He has also aimed to rebuild relationships with wholesale retailers, many of which had been severed as part of former CEO John Donahoe’s pivot to a direct-to-consumer model.
Hill reiterated on a post-earnings call that progress in the company’s efforts to improve its sports-focused product line “continue to be uneven.”
The company would introduce more than a dozen new footwear styles in its sportswear collection, but the work would take time to scale and translate into consistent results, Hill added.
Nike expects fiscal 2027 revenue to be down in low- to mid-single digits, compared with analysts’ average estimate of a 0.4 per cent rise to US$46.47 billion (S$60.1 billion).
Sales continued to fall in China, which has been a weak spot for Nike in recent quarters amid domestic competition and operational missteps.
But North America sales were a bright spot in the company’s fourth quarter, rising 3% and boosting wholesale revenue.
“Our consumer is under pressure around the world, and we can particularly see it having a larger impact on sportswear,” said outgoing finance chief, Matthew Friend.
Revenue trends in Greater China were expected to be in line with the big drops reported in recent times, and the company would “continue to take actions with partners to clean up the marketplace,” Friend said.
The company reported a 1 per cent decline in fourth-quarter revenue to US$10.97 billion, compared with analysts’ average estimate of $10.86 billion, according to data compiled by LSEG.
“Expectations were low and Nike had a sales decline, so these are still not good results,” said David Swartz, analyst at Morningstar.
Nike’s turnaround push has also run into an increasingly tough macroeconomic environment due to tariffs and the war in Iran, and its efforts to clear out its older lifestyle-focused inventory have been a drag on margins.
Against the backdrop of a persistent sales slump, the sportswear giant has invested heavily in marketing ahead of the World Cup to boost revenue and brand visibility – and to help compete with rivals like Adidas.
The company reported earnings per share of 72 US cents for the fourth quarter, which included a 52 US cent benefit related to the expected recovery of import tariffs.
On an adjusted basis, the company reported quarterly earnings per share of 20 US cents, beating estimates of 13 US cents, according to data compiled by LSEG.
Nike is also looking to improve its product line-up in China by reducing selling. Sales fell 17 per cent in the region on a constant currency basis, compared with a 10 per cent drop in the previous quarter, and a 20 per cent drop that Nike had projected in March.
Greater China accounts for 15 per cent of annual sales and is Nike’s third-largest market, after North America and EMEA. But weaker product assortments and share losses to local competitors Anta and Li Ning have dampened sales in the region in recent quarters.
Nike reported a US$986 million benefit from tariff refunds for the three months ended May 31. The company had said in October that tariffs were expected to cost it around US$1.5 billion.
The company had raised prices last year on some products to offset these costs. In May, consumers sued Nike for not refunding tariff-related price hikes. REUTERS
