NKE Stock Falls After-Hours — 12% China Sales Decline Overshadows Q4 Earnings Beat

• NKE reports earnings of $0.72 per share, above estimates of $0.13 per share.
• China sales dropped to $1.3 billion from $1.5 billion in Q4, a 12% decline. 
• Gross margin increased 8.9% during the quarter, largely due to an expected tariff refund of nearly $986 million.

Nike (NKE) share price dropped 2% after-hours as faltering sales in China overshadowed a fourth-quarter earnings and revenue beat. 

The Air Jordan maker’s gross margin increased by 8.9% during the quarter, which the company attributed to an expected tariff refund of nearly $986 million following the Supreme Court's ruling striking down many of President Donald Trump’s global tariffs. 

Nike reported a significant increase in net income, reaching $1.07 billion, or $0.72  per share, up from $211 million, or $0.14 per share, in the same period last year. It beat earnings expectations of $0.13 per share as per data from Fiscal.ai.

The company's revenue reached $10.97 billion, representing a slight 1% decrease from the $11.10 billion recorded in the previous year, but above analyst expectations of $10.86 billion. 

Revenue in Nike's leading market, North America, rose 3% to $4.83 billion, but fell short of the $4.83 billion projected by analysts.

The company did not furnish any outlook in its earnings release. 

NKE shares ended Tuesday at a new 10-year low of $40.75 per share. 

Nike’s China Sales Falter 

The company attributed its muted Q4 revenue to a slowdown in its China business. Overall, China sales dropped 12% to $1.3 billion. Its footwear sales in the Mainland fell 13%, apparel sales dropped 10% and equipment sales fell 17%. 

Earnings before interest and taxes for the Greater China region dropped 20% to $243 million. 

“While we continue to face top-line headwinds, we’re encouraged by progress in performance products and are focused on consistent execution, improved profitability and scaling our wins to realize our full potential,” Chief Executive Elliott Hill said. 

NKE Stock: Retail View 

Retail sentiment on Stocktwits was ‘extremely bullish’ with ‘extremely high’ message volumes. Retail chatter jumped 106% from the previous session and nearly 1,600% over the past month. 

NKE stock has lost 32% year-to-date.

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