Nike Stock Drops After Cautious Outlook Amid Slower Recovery

Nike's stock slipped in premarket trading after the company released its fiscal fourth-quarter earnings report. Despite beating analysts' expectations, Nike forecast a slower recovery due to several factors.

According to Morningstar analyst David Swartz, Nike's 'Win Now' plan has improved efficiency and cost control, but stronger financial results have yet to follow. The plan was introduced about 18 months ago by CEO Elliott Hill, focusing on streamlining operations, improving inventory levels, and reorganizing teams around sport-focused product development and marketing.

Nike's Q4 revenue slipped 1% year-over-year due to a double-digit sales decline in Greater China. However, the company's adjusted earnings per share improved to $0.20 from $0.14 a year earlier, above the analysts' consensus estimate of $0.13 per share.

Morningstar remains constructive on Nike's long-term prospects, expecting stronger product launches and improving profitability to become more visible in 2027. The research firm believes that Nike retains its brand advantages in global sportswear and will return to mid-single-digit yearly sales growth and mid-teen EBIT margins within three years.