Nike released its fourth-quarter earnings after the market closed Thursday, revealing a revenue decline of 10% and a drop in net income of 86%. The company also warned of as much as $1 billion in tariff-related costs.
Yet, shares of Nike soared 15% on Friday after the sneaker giant suggested that better times were ahead. CFO Matthew Friend said he expected the “headwinds to moderate from here” during Thursday’s earnings call. Investors are buying into the turnaround plan being implemented by Elliott Hill, who took over as CEO in October.
Jefferies analyst Randal Konik says the fourth quarter was an inflection point and the bottom of Nike’s turnaround in a research note sent out Friday morning. “We still see a V-shaped recovery in F27 as innovation resonates and margins rebound,” Konik wrote. “Mkt cap at 10-year lows and near 15-yr lows on EV/Sales = Just BUY It!”
Friday’s stock move was the third-biggest one-day gain for the company after slightly higher moves in 2021 (15.5%) and 1987 (16.7%). It was welcome relief for investors who have stuck with the swoosh, which has struggled with its innovation pipeline and faced competition from longtime rival Adidas as well as newer brands such as On and Hoka.
Last year, Nike’s stock was the second-worst performer among the 30 components of the Dow Jones Industrial Average, with a 30% decline over the period. It closed at $53.27 on April 8 for a market cap of $82 billion, down from a peak of $281 billion.
After Friday’s gains, Nike’s stock is down 4.8% year-to-date. In contrast, the S&P 500 is up 5% and closed Friday at a new all-time high.
