Core Viewpoint - NIKE Inc. is expected to report a decline in both revenue and earnings for the second quarter of fiscal 2026, with revenues projected at $12.2 billion, a 1.7% decrease year-over-year, and earnings per share estimated at 37 cents, reflecting a 52.6% decline from the previous year [1][2][10] Financial Performance - The Zacks Consensus Estimate indicates a revenue drop to $12.2 billion and earnings of 37 cents per share for the fiscal second quarter, marking a significant decline from the prior year [2][10] - In the last reported quarter, NIKE achieved an earnings surprise of 81.5%, exceeding consensus estimates by an average of 53.7% over the last four quarters [3] Earnings Expectations - NIKE has an Earnings ESP of -3.79% and a Zacks Rank of 3, suggesting that the likelihood of an earnings beat is low for this quarter [4] - The company is facing challenges in the Sportswear segment due to the deliberate phase-out of aging franchises, which is expected to create revenue softness [11] Regional Performance - North America remains NIKE's strongest region, with projected revenues of $5.2 billion for the second quarter, indicating a modest 0.5% year-over-year growth [7] - In EMEA, revenues are expected to rise by 1.7% as inventory levels normalize and the focus shifts to profitability [8] - Greater China is projected to see a significant revenue decline of 12.7% year-over-year, with revenues estimated at $1.5 billion, reflecting ongoing structural weaknesses [12] Margin and Cost Management - NIKE anticipates a gross margin decline of 300-375 basis points, influenced by higher tariffs and increased promotional activity [13] - SG&A expenses are expected to rise in the high-single digits due to increased demand creation investments [14] Stock Performance and Valuation - NIKE shares have declined by 6.2% over the past three months, underperforming the industry and the S&P 500 [15] - The current stock price of $67.78 reflects a 29.6% increase from its 52-week low but is 17.8% below its 52-week high, with a forward P/E ratio of 31.47, higher than industry and S&P averages [19] Strategic Initiatives - NIKE's "Win Now" strategy aims to restore brand energy and position the company for sustainable growth, focusing on operational resets and improved wholesale partnerships [5][21] - The company is adapting to market dynamics through innovation-led product launches and enhanced consumer engagement [21][23] Challenges Ahead - The company faces near-term challenges, including weak demand in lifestyle categories, elevated SG&A costs, and the impact of new U.S. tariffs [24] - Management's cautious outlook highlights the difficulty in balancing short-term financial pressures with long-term strategic goals [22][24]

Core Viewpoint - NIKE Inc. is expected to report declines in both revenue and earnings for the first quarter of fiscal 2026, with projected revenues of $11 billion, reflecting a 5% year-over-year decrease, and earnings per share (EPS) of 28 cents, indicating a 60% decline from the previous year [1][2][9] Financial Performance - The Zacks Consensus Estimate for fiscal first-quarter revenues is $11 billion, suggesting a 5% decline from the prior year's figure [2] - The estimated EPS for the fiscal first quarter is 28 cents, indicating a significant 60% drop compared to the year-ago number [2] - In the last reported quarter, NIKE achieved an earnings surprise of 16.7%, beating the consensus estimate by an average of 42% over the trailing four quarters [3] Strategic Initiatives - NIKE is implementing its "Win Now" strategy, aimed at restoring brand momentum and positioning for sustainable growth after previous underperformance [5] - The company is focusing on leadership changes, product portfolio rebalancing, and enhancing marketing efforts through major sports events [6] - NIKE is prioritizing sports performance and product innovation, with new offerings like Pegasus Premium and Vomero 18, to cater to evolving consumer preferences [8] Market Positioning - NIKE is strengthening its wholesale partnerships and optimizing its supply chain, which is expected to cushion the bottom line in the upcoming quarter [7] - The company is revitalizing its digital and retail strategy by reducing promotions and improving premium brand positioning [10] Challenges - NIKE faces significant near-term challenges, including aggressive reductions in aging footwear franchises, a reset in China, and new U.S. tariffs that add a $1 billion structural cost burden [11][12] - Management anticipates a mid-single-digit revenue decline and a gross margin contraction of 350-425 basis points, with a notable impact from tariffs [13] - SG&A expenses are projected to increase, which may prolong profitability headwinds without a swift rebound in revenue growth [14] Stock Performance - NIKE shares have risen 13.9% over the past three months, outperforming the broader Consumer Discretionary sector and the S&P 500 [15] - However, NIKE's performance lags behind competitors like Wolverine World Wide and Steven Madden, which have seen significant stock price increases [16] Valuation - At a current price of $71.22, NIKE trades at a forward 12-month P/E multiple of 36.13X, which is above the industry average of 29.83X and the S&P 500's average of 23.44X [18] Long-term Outlook - NIKE's strategic initiatives are expected to build a strong foundation for long-term growth, focusing on innovation and improved consumer engagement [21] - While these efforts may create long-term value, short-term revenue challenges are anticipated due to weak demand in lifestyle products and ongoing issues in Greater China [23][25] - The company's long-term strategies aim to enhance brand equity and capture evolving consumer demand, despite the current financial pressures [24]