Nike just delivered a sobering fiscal 2026 earnings report, underscoring how difficult it is for a market leader to play catch-up in a category it once defined. While the company still expects headwinds through the first two quarters of fiscal 2027, it sees momentum building—led by outstanding performance around the World Cup, including over 1.5 billion views of the “Rip the Script” video during the first week of play. World Cup tailwinds haven’t yet shown up in the latest quarter, which ended May 31.
Now with a challenging fourth quarter and full year behind it, Nike is going on offense. “We’re not building this business for the next quarter or the next year. We’re building it for the decade to come,” CEO Elliott Hill said in the earnings call.
Nike will realize that goal through the Sport Offense strategy: a new corporate structure built around cross-functional teams organized by sport. Essentially, Sport Offense puts sports culture—the distinct identity, passion and performance expectations of each sport—back to the center of everything “Nike,” reversing its product-centric approach of recent years. Sport Offense marks a return to the sport-led model that originally made Nike great. “When we lead with sport, we win,” Hill said.
Early Innings Of Nike’s Turnaround
While the full year revenues beat Wall Street expectations—coming in flat at $46.4 billion (down 2% constant currency)—the fourth quarter was down 1% reported (-4% currency neutral) to $11 billion. A 3% uptick in North America to $4.8 billion couldn’t overcome a staggering 17% constant-currency decline in China to $1.3 billion and a 6% drop to $3 billion in EMEA.
A similar mixed picture runs throughout the latest earnings report. Quarterly net income jumped from $211 million last year to $1.1 billion this year, thanks to a one-time $986 million tariff refund. For the full year, net income fell 3% to $3.1 billion, and earnings per share were down 3%.
Year-end Nike Brand revenues increased 1% to $45.2 billion (-1% constant-currency), Converse brand continued to be a drag, down 31% to $1.2 billion. Hill said the Converse brand strategy was being “sharpened” around the Chuck Taylor and Jack Purcell lines. Basketball star Shai Gilgeous-Alexander, previously with Converse, has now moved over to the Nike Basketball lineup.
Distribution was uneven too. Wholesale, accounting for nearly 60% of revenues in 2025, rose 6% for the year (+4% constant currency), while Nike Direct revenues dropped 6% (-8% constant currency) with digital sales down 12% and Nike-owned stores off 4%.
A return to growth at Foot Locker was the quarter’s wholesale highlight. For the first time in four years, Foot Locker posted positive revenue growth and retail sales comps.
On the plus side, Nike is mending fences with independent retail partners, key influencers in the sporting goods sector. But the shortfall in Nike Direct indicates some brand weakness. It is taking steps to correct that by elevating the customer experience in-store with a focus on “celebrating sports moments.”
Some 150 stores have gotten the “sports-led experience” makeover to date and Nike plans to elevate 50% of its owned store fleet by the end of fiscal 2027. Last year, the company operated 85 in-line Nike stores in the U.S. and 61 internationally. Factory stores make up the bulk of Nike brand’s retail footprint, over 200 in the U.S. and nearly 550 internationally.
Coming up short this quarter was Nike Sportswear, down double-digits, and Jordan Streetwear. Acknowledging the critical need to get both back on track—together they represent about half of company revenues—Hill said, “Our point of differentiation—what creates authenticity for Nike—is our sport business. That creates the halo over both of those brands and what differentiates us from fashion brands.”
During his remarks, Hill pointed to Serena Williams wearing the Radical Air sneaker on the Wimbledon court. The innovation in that sneaker will start to show up in Sportswear soon.
That’s the halo the Sport Offense is designed to create: sport-born authenticity that lifts every brand across the portfolio and every customer touchpoint.
On Offense
Against a backdrop where its more lifestyle-oriented sportswear and streetwear ranges flagged, sports performance offerings got a lift. “Our renewed obsession with sport and the success of our athletes is fueling energy for our brands and building momentum in our performance business, which grew mid-single digits this fiscal year,” Hill reported.
Running was the first sport to get the Sport Offense makeover and the results are showing: Nike running delivered five consecutive quarters of double-digit growth and added about $1 billion to its running business. Hill also added that across Europe and North America, Nike footwear gained 5 points of running market share— more than any other top-five brand. He didn’t name names, but Adidas, Asics, New Balance and Puma are chief competitors in the category.
Training, basketball, all-conditions gear are also being realigned around the Sport Offense strategy, but key at the moment is global football, where Adidas is giving it a run for its money. Brand Adidas sales were up 13% constant currency in fiscal 2025 and advanced 14% through first quarter ending March 31. Adidas is also the only sportswear global partner with FIFA, and is dressing 14 teams in the World Cup, compared to Nike’s 12.
World Cup Forward Momentum
Hill pointed to global football as the best example of how the Sport Offense is playing out. “We’re not treating the tournament as a single moment. We’re using it to reshape our business, telling a connected story over time, engaging different communities in relevant ways and building momentum that carries well beyond the tournament.”
Pivotal to its World Cup moment—and long-term global football strategy—is the storytelling embedded in the six-minute “Rip the Script” long-form video and its numerous short-segment spin-offs.
In a Business of Fashion podcast, Helena Thornton, vice president of Nike brand management, shared, “We live in an attention-deficit culture, don’t we? You’ve got three seconds to catch somebody’s attention, and we said, as a team, if the story is good enough, people will want to watch it.”
With over 1.5 billion views, “Rip the Script” has massively broken through, with Thornton noting that many people are staying around for the whole thing—not to mention those who come back to catch the Easter eggs liberally stashed along the way. “It’s so easy in today’s world to get lost in all of the data and all of the analytics, but if your story is good enough, people are captivated,” she continued.
Nike is counting on World Cup fever to carry on, even if the company hasn’t factored it into its muted guidance for the first half of fiscal 2027. To date, it’s racked up a number of wins:
- Nike has sold 2.5 times as many national team kits as in the same period before the 2022 World Cup. The Aero-Fit sports apparel line, designed to help athletes compete in extreme conditions, has accelerated demand.
- The Mercurial boot became Nike’s fastest-selling cleated footwear launch in the history of Nike Direct.
- More than 5,000 football retail doors globally have been elevated around the World Cup.
- The World Cup “halo” is expected to drive high-single-digit demand growth in the first quarter, a company spokesperson shared with me.
Significantly, Nike is replacing Adidas as Germany’s national team kit partner next year—a real blow for Adidas on its home turf.
Sport Offense Puts The Swoosh Back In Nike
Jefferies analyst Randal Konik believes that Nike bottomed out in the fourth quarter and is stabilizing. Yet he asserted, “Nike’s fiscal fourth quarter results confrm that the right strategies are in place under CEO Hill and are proving themselves out,” pointing to improved margins, disciplined cost management in place, stable inventories and performance growing mid-single-digits.
“The real signal for us is North America—that geography grew 3% and wholesale was up 10%,” he continued. “Getting wholesale back was a central piece of our upgrade thesis, and now it’s actually happening.”
While Konik offers a largely positive read of the latest results, GlobalData’s Neil Saunders is more measured. “There is no doubt that Nike has been trying to aim higher and run faster. Despite these efforts, it has still ended its fiscal year with a whimper rather than going out with a bang,” and he added, “Full recovery remains elusive and a long way off.”
CEO Hill shares Saunder’s frustration. “Overall, the results aren’t there yet. We know we are not living up to our full potential.” However, he feels the renewed energy among his team and momentum growing underneath the latest numbers—and those still to come.
“I see the progress. I see the structural change. I see the foundation getting stronger. I see the Sport Offense taking hold. I see a team that’s been tested and is ready for what’s in front of us,” he concluded. “The goal isn’t one championship. It’s to build a team that can do it again and again.”
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