Nike Beats Q4 Estimates, But a $986 Million Tariff Refund Did the Heavy Lifting

Nike reported fiscal Q4 revenue of $10.97 billion, down 1% from $11.10 billion a year ago, according to CNBC. Analysts surveyed by LSEG had expected $10.85–$10.86 billion, so Nike cleared the bar. Diluted earnings per share came in at 72 cents, compared with 14 cents in the same quarter last year and well above Wall Street's estimate of around 12 cents.

Net income hit $1.07 billion versus $211 million in the year-ago quarter. That sounds like a dramatic turnaround. It isn't.

Fifty-two of those 72 cents per share came from an expected tariff refund of nearly $986 million, after the Supreme Court struck down several of President Donald Trump's emergency-powers tariffs. Nike also said that as of the end of the quarter, it had already collected over $300 million in cash tied to those refund claims, according to CNBC.

Analysts excluded the tariff gain from their adjusted earnings estimates entirely. So the operating beat is real but modest. The profit headline is almost entirely a one-time legal windfall, not evidence that Nike's core business is recovering.

Morningstar, citing Dow Jones reporting, was direct: "Nike's profit and gross margins were buoyed by a tariff refund." Nike itself had flagged the coming benefit last week, saying the refund was "not contemplated in the company's previously provided guidance."

Nike's shares fell as much as 8% in after-hours trading before recovering somewhat, closing the after-hours session down roughly 2.4%, according to Morningstar. During regular trading Tuesday, the stock was sitting at around $41, near a roughly 12-year low. It's down more than 35% since January 1, 2026, and nearly 80% below its all-time high, according to Barron's as cited by Oninvest.

The market isn't confused. It looked past the tariff windfall and focused on the underlying sales trajectory.

Nike's Greater China revenue dropped 12% to $1.30 billion for the quarter. That's better than the $1.24 billion analysts expected, according to StreetAccount data cited by CNBC, but in constant currency the decline was 17%, according to Oninvest. Nike itself had forecast a 20% constant-currency drop in the region back in March, so it landed slightly better than its own grim projection.

Why is China struggling? Oninvest and Reuters point to a weak product lineup and market share losses to domestic Chinese brands Anta and Li Ning. CEO Elliott Hill acknowledged on the analyst call that results in Greater China "aren't there yet" and that Nike is "not living up to our full potential, particularly in Nike sportswear and Jordan streetwear, where sell through remains challenged."

Hill said Nike is "fully committed to winning" the China market back. Whether that's achievable against entrenched local competitors, with a weakened product lineup, is an open question.

North America revenue climbed 3% to $4.83 billion, but missed analysts' expectations of $4.88 billion per StreetAccount. Nike's sales to retailers rose 4% for the quarter. Sales at Nike's own stores and online fell 7%, according to Morningstar.

That gap signals Hill's strategy in practice: rebuild wholesale relationships that former management severed, and pull back from a direct-to-consumer model that wasn't delivering. Whether re-embracing retailers rebuilds brand equity or just shifts margin around remains to be seen.

The strongest argument for Nike bulls is that Hill, who took over as CEO in October 2024, inherited a company already in structural decline and is executing a genuine reset. He pivoted the product lineup toward athletic performance in soccer and running, two categories where LSEG data cited by Morningstar showed 28% of Nike's World Cup merchandise had sold out since the tournament started, better than rival Adidas at 7%. Wholesale momentum is real. Hill has consistently warned the turnaround won't be linear, and North America growth, however modest, points toward early stabilization.

That case is legitimate. But it's also been the case for seven or eight consecutive disappointing quarters. At some point, "the turnaround is coming" stops being a thesis and becomes a habit.

For fiscal year 2026 in full, Nike earned $3.11 billion, or $2.10 per share, down from $3.22 billion and $2.16 per share the prior year, according to CNBC. CFO Matt Friend, described by Oninvest as "outgoing," said Nike's consumer is "under pressure around the world."

For the first two quarters of fiscal 2027, Nike is guiding for earnings to be "flattish" and gross margin to be "slightly positive" in Q1. That's not growth guidance. It's a hold-the-line posture from a company that has lost three-quarters of its stock value over five years.

The unresolved question is whether Nike's newer performance-focused products — the ones Hill is betting the turnaround on — can actually gain traction with consumers, or whether, as some analysts have told Morningstar, they simply haven't caught on. The next concrete data point will be Nike's fiscal Q1 2027 results, which will cover the summer quarter when World Cup-driven soccer demand peaks.