NIKE Q4 FY2025 – Is the Swoosh Turning the Corner?

Let’s be honest, Nike’s (NKE | +15.19%) fiscal Q4 2025 results weren’t exactly a slam dunk. But before we write the company off, let’s take a closer look. Because beneath the surface of declining revenue and thinner margins, there may be the early steps of a comeback dance.

And based on the market opening today, a steep jump in share price, Wall Street certainly smells something promising. But is the optimism warranted?

Let’s lace up and dig in.

The Headline Numbers: Not Pretty, But Not a Blowout Either

Nike reported Q4 revenue of $11.1 billion, down 12% year-over-year. Not great. But analysts had feared worse. EPS came in at $0.14, just a penny above consensus, and gross margin dropped sharply to 40.3% from 44.7% last year.

Link to official Q4 FY2025 results

To put it bluntly, Nike’s top-line and bottom-line performance remains under significant pressure.

But here’s the twist: Nike knew this quarter would be rough. Management even called it the “largest financial impact” from their ongoing “Win Now” restructuring plan.

And with Q1 guidance (a projected ~5% revenue drop) also coming in better than feared, the market is starting to believe that the worst may, just may, be over.

Behind the Pain: A Strategic Realignment in Progress

CEO Elliott Hill painted a picture of a company rediscovering its soul through sport and making the tough calls to fix long-standing issues.

Let’s break it down:

• Digital Sales Dropped 26%, but this was intentional. Nike is aggressively repositioning its digital business to be a full-price, premium destination, not a discount outlet.

• Classic Footwear Franchises Down 40% (e.g., Air Force 1, Dunk, AJ1). Again, this is part of Nike’s plan to reduce dependency on overplayed hits and make space for new innovation.

• Women’s Basketball Grew 50%. The launch of A’ja Wilson’s A-ONE signature line was a sellout in 3 minutes! Nike is finally investing where the growth is.

• Running Division saw high single-digit growth, with the new Vomero 18 becoming a $100M+ franchise in under a quarter.

• Inventory? Flat year-over-year, and down quarter-on-quarter. That’s a quiet but crucial win.

In short, Nike is choosing to shrink strategically before growing again. That’s hard, but necessary.

Let’s Talk Fundamentals

Despite the improving narrative, Nike’s full-year numbers are tough:

• Full-year revenue down 10% to $46.3B

• EPS down 42% to $2.16

• Gross margin for the year dropped to 42.7%, due to discounts, channel mix, and inventory cleanup.

On the bright side:

• Debt load remains manageable, with long-term debt at $8B.

• Dividend growth continues (23 consecutive years) and share buybacks are ongoing (over $12B repurchased under the current program).

That said, return on equity and margins are still far from their historical highs. The company remains in a transitional state.

Global Strategy: Less China, More Sport

One significant change: The company is moving forward with plans to diversify its sourcing footprint. About 16% of Nike’s U.S. imports currently come from China, but that’s expected to fall to single digits by the end of this fiscal year, a smart move in light of the $1 billion hit they anticipate from elevated import tariffs.

To protect margins, they’re planning “surgical” price increases instead of blanket hikes, which suggests a careful balancing act between cost pressures and brand integrity.

Nike also re-engages with retail channels after years of doubling down on direct-to-consumer distribution. It turns out pulling too far back from your wholesale partners can cost you shelf space and mind share, as customers who didn’t see Nike in their go-to stores started looking elsewhere.

Brand & Competitive Moat: Still Strong, But Bruised

Let’s not forget: Nike isn’t just a product company, it’s a brand.

Their deep bench of athlete partnerships (Alcaraz, A’ja Wilson, Rory McIlroy) and high-impact campaigns (like the After Dark Run Series) are still doing the emotional heavy lifting. Their pivot to sport-led storytelling and premium positioning feels like a return to what Nike used to do best.

But they face increasing pressure from fast-moving competitors like On, Hoka, Lululemon, and Adidas. Execution will be everything.

Nike's analyst call and guidance boost price

One important detail that caught my attention? The tone shift during the analyst call. While the initial earnings release painted a picture of continued weakness, it was the conversation afterward that really moved the needle.

CEO Elliott Hill didn’t sugarcoat the numbers, but he struck an unusually confident tone: “We’re turning the page,” he said. That clarity, paired with signs of improving order volumes from retail partners for the holiday season, seems to have struck a chord.

The stock didn’t start rallying immediately, but once investors heard the call, shares surged more than 10% in the after-hours session. In other words, Wall Street is no longer reacting just to the results, it's reacting to the roadmap.

Chart Talk: A Technical Breakout with Substance

On the daily chart, Nike ($NKE) has just pulled off a clean breakout. After weeks of coiling between ~$59 and ~$64, the stock opened with a big gap up, breaking above the recent resistance zone (highlighted in red) . This powerful breakout comes with strong volume, clearly driven by the market’s enthusiastic response to the earnings call.

The previous base (highlighted in green) held firm on multiple tests throughout June, building solid technical support. Importantly, price is now well above the 10, 20 & 50-day simple moving averages (SMA), which are beginning to curl higher, a positive signal for swing traders.

Conclusion? Technically, Nike is no longer just bouncing, it’s breaking out. While some short-term consolidation is possible after such a steep move, the price action strongly supports the idea that the “worst is behind us” narrative is gaining traction in the market.

So... Would I Buy Nike Stock Right Now?

Here’s my honest take:

Short term? I’d wait. A 15% pop on modestly-better-than-expected results is a bit frothy. Let the dust settle.

Long term? I’m intrigued, but cautious. Nike is clearly a high-quality brand with global reach, a strong balance sheet, and improving fundamentals. But revenue is still declining, profitability is compressed, and the turnaround is in its early innings.

If you’re a patient investor (and if you’re reading this, I hope you are), Nike is shaping up to be a classic "turnaround-at-scale" story. It’s not without risk, but it’s exactly the kind of setup where long-term compounding begins, after everyone else has left the field.

Final Verdict from Yours Truly?

I’m not sprinting in just yet, but I’m tightening my laces. If the next quarter confirms this positive shift, and especially if gross margins recover, I’ll be ready to make my move.

As always, stay rational, stay curious and keep playing the long game.

Yours in fundamentals,

Walter - ChartMill.com