Nike (NYSE:) the athletic and footwear giant that remains one of the great global brands, reports their fiscal Q1 ’26 earnings after the closing bell on Tuesday, September 30, 2025.
Investors – per the Street consensus estimates – are expecting $0.27 in earnings per share, on $11 billion in revenue and $480 billion in operating income for expected y-o-y declines of -61%, -5% and -60%.
Nike fiscal Q4 ’25, which was reported late June ’25, saw EPS fall 79% and revenue -12% so Q1 ’26’s expected y-o-y growth is actually a sequential improvement from last quarter. Here is for Nike’s June ’25 financial results.
The fiscal Q4 ’24 China revenue growth fell 21% y-o-y, while China’s “EBIT” fell 45% y-o-y. North America revenue fell 11%, while North America EBIT fell 29% y-o-y. North America revenue has declined y-o-y for 5 straight quarters, as of fiscal q4 ’25.
Expect that to change in fiscal ’26. After fiscal ’25 (ended June ’25), one unambiguous positive for Nike is that it faces very easy comparisons for the next 4 – 5 quarters.
Peak margins for Nike, looking back at late 2021, during the COVID period, were 45% – 47% for gross margins, 15% – 17% for operating margins, and 12% – 15% for the net income margin. A “return to normal” margin for Nike will be a long way back.
The new Kim Kardashian-inspired SKIMS launch was expected to have happened 9/26, so it’s possible we’ll hear some commentary from Elliott Hill (Nike CEO) and the Nike management team on the reception of SKIMS, but three days isn’t really much to bank on. That being said, it does show that the management team is pushing forward into new product lines. NikeSkims is expected to highlight the sports-led womens activewear segment.
The quarter is likely to be better, but it’s unlikely the turnaround will be that quick. The inventory liquidation the last 3-4 quarters has to be replenished.
Here’s One Interesting Aspect to Nike: Capex
It’s been interesting to watch Nike’s financials during this period, which was late in John Donahoe’s regime and then all of Elliott Hill’s period as CEO. Nike’s free-cash-flow has held up relatively well and remained positive given the enormous pressure on athletic footwear from the loss of the retail channel like Dick’s and FootLocker.
Here’s the longer trend in Nike’s capex:
- 4-qtr avg: $622 ml
- 12-qtr-avg: $822 ml
- 20-qtr avg: $814 ml
- 40-qtr avg: $951 ml
Nike has gradually brought down or reduced their capex over the years, which has gradually raised their free-cash-flow over the same time periods.
Is that worrisome? Maybe a little.
Nike added a line item to their income statement in late 2011 called “demand creation expense,” which has averaged roughly 10% of revenue since 2011 (using the common-size income statement). Technically, a demand-creation expense is “capex”, depending on the time period for which the “demand-creation” was budgeted.
This is the nitty-gritty of accounting, and is probably not well understood by readers, but I’ve wondered if Nike’s EPS has been understated thanks to the additional line-item and thus free-cash-flow was overstated, since the “expense” penalizes EPS in the current period while understating capex in the same period.
Nike Valuation:
The stock price is still down more than 50% from it’s late 2021 high of $179 in early November of that year.
After fiscal Q4 ’25 report in late June ’25, analyst consensus in terms of expected EPS and revenue growth for fiscal ’26 fell from +2% expected EPS growth to -23%, while expected revenue growth fell from an expected flat or 0% in fiscal ’26 to -1%.
Currently, Nike is trading at 42x expected ’26 EPS and 31x if we look at the next 3 years and take the average multiple.
Revenue growth is expected to fall 1% in fiscal ’26 and rise an expected 3% if we look at the three-year average. Current consensus expects 5% revenue growth for Nike in fiscal ’27 and fiscal ’28.
Price-to-cash-flow and free-cash-flow per share is still high 20x valuation area. Price to revenue is now around 1.55X – 1.65x and the dividend yield is 2.3% as of Friday, September 26th’s close.
Morningstar’s fair value price on Nike is $104 per share.
There is nothing even remotely attractive about Nike’s valuation here since the inventory liquidation crushed margins. Let’s see how fast Nike can recover, given the end of inventory liquidation.
Conclusion:
The collapse in Nike’s stock has now been going 4 years after peaking in late 2021 at $179 per share. Normally you’d think great brands could rebound faster than this, but not only was the brand destruction a function of John Donahoe’s switch to direct-to-consumer (DTC) and thus abandoning the traditional brick-and-mortar stores where Nike was always a preeminent shelf brand, but there was also China, which has seen 4 straight quarters of negative y-o-y revenue and EBIT growth, so it seems as if the inventory liquidation that happened in the US, also happened concurrently in China, and possibly was additionally influenced by the tariff issue.
Dick’s Sporting Goods (NYSE:) (DSK) today has returned to a meaningful floor presence of Nike product today, after shopping at the store in early August ’25. Nike footwear was found in several departments, with prominent advertising, while Nike apparel was found on the main floor near the entrance, but with a more limited product line.
Elliott Hill is moving quickly to restore Nike to the former retail channels.
That being said the big question is, “When can Nike return to mid-to-high-single-digit revenue growth, and low teens EPS ?”
Inquiring minds want to know.
It was surprising to see sharp reductions in Nike’s expected ’26 EPS and revenue growth as noted above, after the fiscal Q4 ’24 results.
While the inventory liquidation which was noted in previous articles, is now probably complete, ( and , the growth drivers may still take time to develop.
There is a lot of caution coming into Tuesday night’s earnings release.
Technically, the stock has not made a new low since early April ’25’s “Liberation Day” selloff to $52, and there is a gap at $63 (per one technician) which can often act like a magnet.
This blog has an average cost in terms of client shares of roughly $80 per share. If the stock drops into the low $60’s near the existing gap at $63, more shares would likely be bought to lower the cost basis, but Nike needs to make some forward progress in the next few quarters. That being said I have confidence Elliott Hill and the Nike management team can turn the business around. It was surprising to see Nike get back into Dick’s (DKS) so quickly, which is a real positive.
Disclaimer: None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. None of this information may be updated and if updated may not be done in a timely fashion.