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NIKE Pre-Q2 Earnings: Buy Now or Wait Out Near-Term Volatility?
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Key Takeaways
NKE is set to report Q2 results with revenues expected to slip 1.7% y/y and EPS projected to fall 52.6%.
NIKE sees growth in North America and EMEA, led by wholesale gains, pricing discipline and inventory cleanup.
NKE faces pressure from China weakness, higher tariffs and margin strain as it phases out footwear franchises.
NIKE Inc. (NKE - Free Report) is slated to release second-quarter fiscal 2026 results on Dec. 18. The leading sports apparel retailer is estimated to have witnessed year-over-year declines in the top and bottom lines in 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 figure. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at 37 cents per share, indicating a decline of 52.6% from the year-ago reported number. Earnings estimates for the fiscal second quarter were unchanged in the last 30 days.
In the last reported quarter, the company delivered an earnings surprise of 81.5%. Its bottom line beat the consensus estimate by 53.7%, on average, in the trailing four quarters.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for NIKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
NIKE has been showing renewed momentum, driven by disciplined execution of its “Win Now” strategy and a steady recovery in its wholesale order book. The “Win Now” initiative represents a fast-track operational reset aimed at restoring brand energy, cleaning up the marketplace and positioning the business for more sustainable growth following a period of underperformance.
North America has been NIKE’s strongest region and the early anchor of its turnaround. The region is delivering modest revenue growth as inventory health improves and consumer demand stabilizes across core sports categories. Running, training and basketball each posted double-digit gains in the fiscal first quarter, while Sportswear is showing early signs of recovery.
Wholesale growth in North America has been benefiting from normalized shipment timing, expanded distribution and improved sell-through at key partners. Sharper assortments, fewer promotions and upgraded retail presentation have helped strengthen brand momentum and engagement. For second-quarter fiscal 2026, our model forecasts North America revenues of $5.2 billion, indicating 0.5% year-over-year growth.
Progress is also emerging internationally. In EMEA, NIKE has largely normalized inventory levels and is moving toward a more full-price selling environment, even as industry promotions remain elevated. Wholesale confidence in EMEA is improving and the digital business is being refocused on profitability over volume. Our model projects EMEA revenues to rise 1.7% in second-quarter fiscal 2026. In APLA, strong demand for performance footwear and tighter inventory controls have been supporting healthier growth trends.
Overall, strategic pricing, supply-chain optimization and disciplined inventory management are reinforcing margin recovery. By refining its digital and retail playbook and strengthening wholesale partnerships, NIKE is laying a sturdier foundation for profitable growth.
However, NIKE faces mounting near-term challenges across multiple fronts. The Sportswear segment, historically a key profit engine, remains under pressure as the company deliberately phases down aging franchises such as Air Force 1, Dunk and Jordan 1 under its “Win Now” strategy. While this portfolio reset is critical for long-term brand relevance, it is creating near-term revenue softness and volume pressure, likely weighing on results in the to-be-reported quarter.
Greater China continues to be a major overhang. Structural weakness across digital and physical channels is expected to persist through fiscal 2026, pressuring both sales and profitability. Given the region’s outsized contribution to earnings, prolonged softness poses significant risks to NIKE’s margin recovery. Our model forecasts second-quarter fiscal 2026 Greater China revenues of $1.5 billion, suggesting a 12.7% year-over-year decline.
Margin pressures remain elevated due to higher tariffs, increased promotional activity and an unfavorable channel mix. Management expects the gross margin to decline 300-375 bps in the quarter, including a 175-bps tariff impact. It forecasts SG&A dollars to rise in the high-single digits, driven by higher demand creation investments and a low-single-digit rise in operating overhead.
Our model projects the gross margin at 40.6%, indicating a 300 bps year-over-year fall, alongside a 6.2% year-over-year increase in SG&A expenses tied to stepped-up demand creation investments. Meanwhile, the SG&A rate is expected to increase 270 bps year over year to 35.1%.
NIKE’s Price Performance & Valuation
NKE shares have exhibited a deterioration in the past three months, declining as much as 6.2%. The stock has underperformed the industry’s fall of 6% and the S&P 500’s growth of 4.3%. However, the stock has outperformed the broader Consumer Discretionary sector’s decline of 7.9% in the same period.
However, NIKE's performance is notably weaker than that of its close competitor, Steven Madden (SHOO - Free Report) , which has rallied 35.9% in the past three months. Nonetheless, NKE has outperformed Wolverine World Wide (WWW - Free Report) and Adidas’ (ADDYY - Free Report) declines of 40.2% and 7.7%, respectively, in the same period.
NKE’s 3-Month Stock Performance
Image Source: Zacks Investment Research
At the current price of $67.78, NIKE trades 29.6% above its 52-week low of $52.28. The current price trades 17.8% below the 52-week high mark of $82.44.
NKE’s valuation appears quite pricey. The company trades at a forward 12-month P/E multiple of 31.47X, exceeding the industry average of 28.06X and the S&P 500’s average of 23.35X.
Image Source: Zacks Investment Research
Investment Thesis
NIKE’s strategic initiatives are laying a solid foundation for long-term growth by reinforcing its competitive moat, expanding its innovation-led product pipeline and deepening consumer engagement across channels. Through sharper brand positioning, a renewed focus on performance-driven innovation, and improved retail and digital execution, NIKE is adapting to evolving market dynamics while preserving its leadership in global sports and lifestyle apparel. The company’s “Win Now” strategy further supports this transformation by resetting the marketplace, strengthening wholesale partnerships and prioritizing profitable growth.
That said, the transition is not without near-term friction. Management’s soft guidance for second-quarter fiscal 2026 reflects ongoing revenue pressure as NIKE phases out legacy lifestyle franchises and navigates a challenging demand environment. Continued weakness in Greater China and softness in core lifestyle categories remain key overhangs on the company’s near-term performance. While these headwinds may weigh on growth in the coming quarters, they appear largely transitional, positioning NIKE for a healthier, more sustainable growth trajectory over the longer term.
Conclusion
NIKE stands at a critical crossroads. The company’s long-term strategies, anchored by the “Win Now” initiative, innovation-led product launches, wholesale re-engagement, and a sharper digital and retail focus, are designed to strengthen brand equity, restore growth momentum and capture evolving consumer demand. These initiatives should enhance NIKE’s competitive edge, broaden its global reach and drive sustained growth over time.
However, the near-term picture is far less encouraging. The company faces persistent headwinds from weak demand in lifestyle categories, a reset in China, elevated SG&A costs and the structural challenge of newly imposed U.S. tariffs, which add a significant cost burden. Management’s cautious outlook further underscores the difficulty of balancing short-term financial pressure with long-term transformation.
Overall, while NIKE is well-poised for growth, investors should remain mindful of the cloudy near-term earnings trajectory.
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NIKE Pre-Q2 Earnings: Buy Now or Wait Out Near-Term Volatility?
Key Takeaways
NIKE Inc. (NKE - Free Report) is slated to release second-quarter fiscal 2026 results on Dec. 18. The leading sports apparel retailer is estimated to have witnessed year-over-year declines in the top and bottom lines in 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 figure. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at 37 cents per share, indicating a decline of 52.6% from the year-ago reported number. Earnings estimates for the fiscal second quarter were unchanged in the last 30 days.
In the last reported quarter, the company delivered an earnings surprise of 81.5%. Its bottom line beat the consensus estimate by 53.7%, on average, in the trailing four quarters.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for NIKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
NIKE has an Earnings ESP of -3.79% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
What’s in Store for NKE in Q2 Earnings?
NIKE has been showing renewed momentum, driven by disciplined execution of its “Win Now” strategy and a steady recovery in its wholesale order book. The “Win Now” initiative represents a fast-track operational reset aimed at restoring brand energy, cleaning up the marketplace and positioning the business for more sustainable growth following a period of underperformance.
North America has been NIKE’s strongest region and the early anchor of its turnaround. The region is delivering modest revenue growth as inventory health improves and consumer demand stabilizes across core sports categories. Running, training and basketball each posted double-digit gains in the fiscal first quarter, while Sportswear is showing early signs of recovery.
Wholesale growth in North America has been benefiting from normalized shipment timing, expanded distribution and improved sell-through at key partners. Sharper assortments, fewer promotions and upgraded retail presentation have helped strengthen brand momentum and engagement. For second-quarter fiscal 2026, our model forecasts North America revenues of $5.2 billion, indicating 0.5% year-over-year growth.
Progress is also emerging internationally. In EMEA, NIKE has largely normalized inventory levels and is moving toward a more full-price selling environment, even as industry promotions remain elevated. Wholesale confidence in EMEA is improving and the digital business is being refocused on profitability over volume. Our model projects EMEA revenues to rise 1.7% in second-quarter fiscal 2026. In APLA, strong demand for performance footwear and tighter inventory controls have been supporting healthier growth trends.
Overall, strategic pricing, supply-chain optimization and disciplined inventory management are reinforcing margin recovery. By refining its digital and retail playbook and strengthening wholesale partnerships, NIKE is laying a sturdier foundation for profitable growth.
NIKE, Inc. Price and EPS Surprise
NIKE, Inc. price-eps-surprise | NIKE, Inc. Quote
However, NIKE faces mounting near-term challenges across multiple fronts. The Sportswear segment, historically a key profit engine, remains under pressure as the company deliberately phases down aging franchises such as Air Force 1, Dunk and Jordan 1 under its “Win Now” strategy. While this portfolio reset is critical for long-term brand relevance, it is creating near-term revenue softness and volume pressure, likely weighing on results in the to-be-reported quarter.
Greater China continues to be a major overhang. Structural weakness across digital and physical channels is expected to persist through fiscal 2026, pressuring both sales and profitability. Given the region’s outsized contribution to earnings, prolonged softness poses significant risks to NIKE’s margin recovery. Our model forecasts second-quarter fiscal 2026 Greater China revenues of $1.5 billion, suggesting a 12.7% year-over-year decline.
Margin pressures remain elevated due to higher tariffs, increased promotional activity and an unfavorable channel mix. Management expects the gross margin to decline 300-375 bps in the quarter, including a 175-bps tariff impact. It forecasts SG&A dollars to rise in the high-single digits, driven by higher demand creation investments and a low-single-digit rise in operating overhead.
Our model projects the gross margin at 40.6%, indicating a 300 bps year-over-year fall, alongside a 6.2% year-over-year increase in SG&A expenses tied to stepped-up demand creation investments. Meanwhile, the SG&A rate is expected to increase 270 bps year over year to 35.1%.
NIKE’s Price Performance & Valuation
NKE shares have exhibited a deterioration in the past three months, declining as much as 6.2%. The stock has underperformed the industry’s fall of 6% and the S&P 500’s growth of 4.3%. However, the stock has outperformed the broader Consumer Discretionary sector’s decline of 7.9% in the same period.
However, NIKE's performance is notably weaker than that of its close competitor, Steven Madden (SHOO - Free Report) , which has rallied 35.9% in the past three months. Nonetheless, NKE has outperformed Wolverine World Wide (WWW - Free Report) and Adidas’ (ADDYY - Free Report) declines of 40.2% and 7.7%, respectively, in the same period.
NKE’s 3-Month Stock Performance
Image Source: Zacks Investment Research
At the current price of $67.78, NIKE trades 29.6% above its 52-week low of $52.28. The current price trades 17.8% below the 52-week high mark of $82.44.
NKE’s valuation appears quite pricey. The company trades at a forward 12-month P/E multiple of 31.47X, exceeding the industry average of 28.06X and the S&P 500’s average of 23.35X.
Image Source: Zacks Investment Research
Investment Thesis
NIKE’s strategic initiatives are laying a solid foundation for long-term growth by reinforcing its competitive moat, expanding its innovation-led product pipeline and deepening consumer engagement across channels. Through sharper brand positioning, a renewed focus on performance-driven innovation, and improved retail and digital execution, NIKE is adapting to evolving market dynamics while preserving its leadership in global sports and lifestyle apparel. The company’s “Win Now” strategy further supports this transformation by resetting the marketplace, strengthening wholesale partnerships and prioritizing profitable growth.
That said, the transition is not without near-term friction. Management’s soft guidance for second-quarter fiscal 2026 reflects ongoing revenue pressure as NIKE phases out legacy lifestyle franchises and navigates a challenging demand environment. Continued weakness in Greater China and softness in core lifestyle categories remain key overhangs on the company’s near-term performance. While these headwinds may weigh on growth in the coming quarters, they appear largely transitional, positioning NIKE for a healthier, more sustainable growth trajectory over the longer term.
Conclusion
NIKE stands at a critical crossroads. The company’s long-term strategies, anchored by the “Win Now” initiative, innovation-led product launches, wholesale re-engagement, and a sharper digital and retail focus, are designed to strengthen brand equity, restore growth momentum and capture evolving consumer demand. These initiatives should enhance NIKE’s competitive edge, broaden its global reach and drive sustained growth over time.
However, the near-term picture is far less encouraging. The company faces persistent headwinds from weak demand in lifestyle categories, a reset in China, elevated SG&A costs and the structural challenge of newly imposed U.S. tariffs, which add a significant cost burden. Management’s cautious outlook further underscores the difficulty of balancing short-term financial pressure with long-term transformation.
Overall, while NIKE is well-poised for growth, investors should remain mindful of the cloudy near-term earnings trajectory.