Nike Shares Soar 17% as CEO Signals Turnaround After Tough Q4 Earnings
Nike Shares Soar 17% as CEO Signals Turnaround After Tough Q4 Earnings
Nike’s stock experienced a significant surge, climbing 17% on Friday, as CEO Elliott Hill assured investors that the company’s most challenging period is behind it. This optimistic outlook followed a fiscal fourth-quarter earnings report that, while poor, was better than anticipated by Wall Street.
Despite reporting a 12% drop in sales and an 86% plunge in net income for the quarter, Hill emphasized that Nike has navigated the worst of its slump. He indicated that the decline in sales and profits is expected to moderate in upcoming quarters, signaling a turning point for the sportswear giant. Hill stated that while the Q4 and FY25 results “are not up to the Nike standard,” the “Win Now” turnaround actions are beginning to yield results, and the company expects improvements from here.
Initially, shares dipped after the market close on Thursday following the release of the results, which offered few details on the turnaround’s progress. However, during an hour-long earnings call, Hill’s reassurances and insights into new product launches, efforts to re-engage wholesale partners, and strategic moves like selling on Amazon again since 2019, propelled the stock up over 10% in extended trading. By Friday morning, additional bullish commentary from banks, including HSBC’s first “buy” rating on Nike in 3½ years, further fueled the rally, pushing the stock even higher. HSBC raised its price target to $80, anticipating a 28% upside.
While investor sentiment has clearly improved, Nike still faces hurdles. The company anticipates a mid-single-digit percentage sales decline in the current quarter and is working to clear out stale inventory from classic lines like Dunks and Jordan, which has impacted profit margins. Both Hill and CFO Matt Friend noted that profits would remain under pressure through the first half of fiscal 2026 due to inventory clearance and tariff costs, with improvements expected in the latter half. The company remains cautious on providing a timeline for a return to overall revenue growth, with Hill stating they will “take it 90 days at a time” as a full recovery will take time.
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