NIKE Inc. NKE is slated to launch second-quarter fiscal 2026 outcomes on Dec. 18. The main sports activities attire retailer is estimated to have witnessed year-over-year declines within the high and backside traces within the fiscal second quarter.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $12.2 billion, suggesting a 1.7% decline from the year-ago quarter’s reported determine. The Zacks Consensus Estimate for the corporate’s fiscal second-quarter earnings is pegged at 37 cents per share, indicating a decline of 52.6% from the year-ago reported quantity. Earnings estimates for the fiscal second quarter have been unchanged within the final 30 days.
Within the final reported quarter, the corporate delivered an earnings shock of 81.5%. Its backside line beat the consensus estimate by 53.7%, on common, within the trailing 4 quarters.
Earnings Whispers
Our confirmed mannequin doesn’t conclusively predict an earnings beat for NIKE this time round. The mix of a optimistic Earnings ESP and a Zacks Rank #1 (Robust Purchase), 2 (Purchase) or 3 (Maintain) will increase the percentages of an earnings beat. However that isn’t the case right here. You possibly can uncover the very best shares to purchase or promote earlier than they’re reported with our Earnings ESP Filter.
NIKE has an Earnings ESP of -3.79% and a Zacks Rank of three. You possibly can see the entire record of at this time’s Zacks #1 Rank shares right here.
What’s in Retailer for NKE in Q2 Earnings?
NIKE has been displaying renewed momentum, pushed by disciplined execution of its “Win Now” technique and a gradual restoration in its wholesale order ebook. The “Win Now” initiative represents a fast-track operational reset aimed toward restoring model vitality, cleansing up {the marketplace} and positioning the enterprise for extra sustainable development following a interval of underperformance.
North America has been NIKE’s strongest area and the early anchor of its turnaround. The area is delivering modest income development as stock well being improves and shopper demand stabilizes throughout core sports activities classes. Working, coaching and basketball every posted double-digit features within the fiscal first quarter, whereas Sportswear is displaying early indicators of restoration.
Wholesale development in North America has been benefiting from normalized cargo timing, expanded distribution and improved sell-through at key companions. Sharper assortments, fewer promotions and upgraded retail presentation have helped strengthen model momentum and engagement. For second-quarter fiscal 2026, our mannequin forecasts North America revenues of $5.2 billion, indicating 0.5% year-over-year development.
Progress can also be rising internationally. In EMEA, NIKE has largely normalized stock ranges and is shifting towards a extra full-price promoting atmosphere, at the same time as trade promotions stay elevated. Wholesale confidence in EMEA is bettering and the digital enterprise is being refocused on profitability over quantity. Our mannequin initiatives EMEA revenues to rise 1.7% in second-quarter fiscal 2026. In APLA, sturdy demand for efficiency footwear and tighter stock controls have been supporting more healthy development traits.
Total, strategic pricing, supply-chain optimization and disciplined stock administration are reinforcing margin restoration. By refining its digital and retail playbook and strengthening wholesale partnerships, NIKE is laying a sturdier basis for worthwhile development.
NIKE, Inc. Value and EPS Shock
NIKE, Inc. price-eps-surprise | NIKE, Inc. Quote
Nonetheless, NIKE faces mounting near-term challenges throughout a number of fronts. The Sportswear phase, traditionally a key revenue engine, stays beneath stress as the corporate intentionally phases down getting old franchises akin to Air Drive 1, Dunk and Jordan 1 beneath its “Win Now” technique. Whereas this portfolio reset is important for long-term model relevance, it’s creating near-term income softness and quantity stress, seemingly weighing on leads to the to-be-reported quarter.
Larger China continues to be a serious overhang. Structural weak point throughout digital and bodily channels is predicted to persist via fiscal 2026, pressuring each gross sales and profitability. Given the area’s outsized contribution to earnings, extended softness poses vital dangers to NIKE’s margin restoration. Our mannequin forecasts second-quarter fiscal 2026 Larger China revenues of $1.5 billion, suggesting a 12.7% year-over-year decline.
Margin pressures stay elevated on account of increased tariffs, elevated promotional exercise and an unfavorable channel combine. Administration expects the gross margin to say no 300-375 bps within the quarter, together with a 175-bps tariff impression. It forecasts SG&A {dollars} to rise within the high-single digits, pushed by increased demand creation investments and a low-single-digit rise in working overhead.
Our mannequin initiatives the gross margin at 40.6%, indicating a 300 bps year-over-year fall, alongside a 6.2% year-over-year enhance in SG&A bills tied to stepped-up demand creation investments. In the meantime, the SG&A charge is predicted to extend 270 bps 12 months over 12 months to 35.1%.
NIKE’s Value Efficiency & Valuation
NKE shares have exhibited a deterioration previously three months, declining as a lot as 6.2%. The inventory has underperformed the trade’s fall of 6% and the S&P 500’s development of 4.3%. Nonetheless, the inventory has outperformed the broader Client Discretionary sector’s decline of seven.9% in the identical interval.
Nonetheless, NIKE’s efficiency is notably weaker than that of its shut competitor, Steven Madden SHOO, which has rallied 35.9% previously three months. Nonetheless, NKE has outperformed Wolverine World Extensive WWW and Adidas’ ADDYY declines of 40.2% and seven.7%, respectively, in the identical interval.
NKE’s 3-Month Inventory Efficiency
Picture Supply: Zacks Funding Analysis
On the present worth of $67.78, NIKE trades 29.6% above its 52-week low of $52.28. The present worth trades 17.8% beneath the 52-week excessive mark of $82.44.
NKE’s valuation seems fairly expensive. The corporate trades at a ahead 12-month P/E a number of of 31.47X, exceeding the trade common of 28.06X and the S&P 500’s common of 23.35X.
Picture Supply: Zacks Funding Analysis
Funding Thesis
NIKE’s strategic initiatives are laying a stable basis for long-term development by reinforcing its aggressive moat, increasing its innovation-led product pipeline and deepening shopper engagement throughout channels. Via sharper model positioning, a renewed give attention to performance-driven innovation, and improved retail and digital execution, NIKE is adapting to evolving market dynamics whereas preserving its management in international sports activities and life-style attire. The corporate’s “Win Now” technique additional helps this transformation by resetting {the marketplace}, strengthening wholesale partnerships and prioritizing worthwhile development.
That stated, the transition will not be with out near-term friction. Administration’s smooth steerage for second-quarter fiscal 2026 displays ongoing income stress as NIKE phases out legacy life-style franchises and navigates a difficult demand atmosphere. Continued weak point in Larger China and softness in core life-style classes stay key overhangs on the corporate’s near-term efficiency. Whereas these headwinds could weigh on development within the coming quarters, they seem largely transitional, positioning NIKE for a more healthy, extra sustainable development trajectory over the long term.
Conclusion
NIKE stands at a important crossroads. The corporate’s long-term methods, anchored by the “Win Now” initiative, innovation-led product launches, wholesale re-engagement, and a sharper digital and retail focus, are designed to strengthen model fairness, restore development momentum and seize evolving shopper demand. These initiatives ought to improve NIKE’s aggressive edge, broaden its international attain and drive sustained development over time.
Nonetheless, the near-term image is much much less encouraging. The corporate faces persistent headwinds from weak demand in life-style classes, a reset in China, elevated SG&A prices and the structural problem of newly imposed U.S. tariffs, which add a big value burden. Administration’s cautious outlook additional underscores the problem of balancing short-term monetary stress with long-term transformation.
Total, whereas NIKE is well-poised for development, traders ought to stay aware of the cloudy near-term earnings trajectory.
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NIKE, Inc. (NKE) : Free Inventory Evaluation Report
Wolverine World Extensive, Inc. (WWW) : Free Inventory Evaluation Report
Adidas AG (ADDYY) : Free Inventory Evaluation Report
Steven Madden, Ltd. (SHOO) : Free Inventory Evaluation Report
This text initially printed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
