The Zacks Analyst Blog NIKE, Steven Madden, Wolverine World Wide and Adidas'

Core Viewpoint - NIKE Inc. is expected to report a decline in both revenue and earnings for the second quarter of fiscal 2026, reflecting ongoing challenges in the market and strategic transitions [2][3][18]. Financial Performance - The Zacks Consensus Estimate for NIKE's fiscal second-quarter revenues is $12.2 billion, indicating a 1.7% decline year-over-year [3]. - The estimated earnings per share for the same quarter is 37 cents, representing a significant decline of 52.6% from the previous year [3]. - In the last reported quarter, NIKE achieved an earnings surprise of 81.5%, beating the consensus estimate by an average of 53.7% over the trailing four quarters [4]. Strategic Initiatives - NIKE's "Win Now" strategy aims to restore brand energy and position the company for sustainable growth after a period of underperformance [6][17]. - The company is focusing on disciplined execution, supply-chain optimization, and strategic pricing to enhance margin recovery [10][17]. Regional Performance - North America remains NIKE's strongest region, with projected revenues of $5.2 billion for the second quarter, reflecting a modest growth of 0.5% year-over-year [8]. - In EMEA, revenues are expected to rise by 1.7%, while Greater China is projected to see a decline of 12.7% in revenues, amounting to $1.5 billion [9][11]. Margin and Cost Pressures - NIKE anticipates a gross margin decline of 300-375 basis points, influenced by higher tariffs and increased promotional activity [12][13]. - SG&A expenses are expected to rise in the high-single digits due to increased demand creation investments [12][13]. Stock Performance and Valuation - NIKE shares have decreased by 6.2% over the past three months, underperforming the industry and the S&P 500 [14][15]. - The current P/E ratio of 31.47X exceeds the industry average of 28.06X and the S&P 500's average of 23.35X, indicating a potentially pricey valuation [16]. Long-term Outlook - NIKE's strategic initiatives are designed to strengthen its competitive position and drive long-term growth, despite facing near-term challenges [17][19]. - The company is navigating a difficult demand environment, particularly in lifestyle categories and Greater China, which may impact short-term performance [18][20].