Nike shares fell 3.5% in pre-market trading on Wednesday after its latest quarterly results failed to revive investor hopes of a swift turnaround under CEO Elliot Hill.
A cautious sales outlook and weak China demand overshadowed a modest fourth-quarter revenue beat, which also dragged down shares of European peers Adidas and Puma, dropping more than 1% each.
Investors were awaiting Nike's results to see if Hill's nearly two-year turnaround was reaping significant results.
The world's largest sportswear maker has been struggling to regain momentum after losing market share to rivals, as well as rebuild wholesale relationships, and clear older lifestyle inventory. The stock has already fallen about 35% this year.
The sportswear giant's fourth-quarter revenue fell 1%, with double-digit sales declines in China, which did little to reassure investors.
Nike also projected a further revenue drop through the first half of fiscal 2027 as it navigates tariff pressures, geopolitical uncertainty and cautious consumer spending.
"Revenue declines through H1 mean no earnings growth until at least H2'27 as Nike prioritizes marketplace health over near-term sales — a good decision for the company but not for rapid recovery of the stock," Bernstein analysts said.
CHINA REMAINS A DRAG
China revenue would likely stay under pressure as Nike works with retail partners to clear excess inventory, outgoing finance chief Matthew Friend said.
Greater China accounts for about 15% of Nike's annual revenue and is its third-largest market after North America and Europe, the Middle East, and Africa.
Some analysts said Nike's China reset shows some signs of progress, but near-term sales are likely to remain subdued as the company focuses on rebuilding growth through a more premium, sports-led approach.
Nike plans to launch more than a dozen footwear styles, Hill said, adding that it will take time for those products to deliver consistent results, which some analysts expect to help the company's turnaround in 2027.
The company, however, pointed to early progress, citing stronger World Cup marketing, faster product launches and improving football demand after an April slowdown, while forecasting a slightly positive first-quarter gross margin.
The company's forward price-to-earnings multiple is 21.95, compared with 16.81 for Adidas, according to LSEG data.
