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Nike FY2026 Q4 Earnings: The 890-Basis-Point Margin Jump That Wasn't a Turnaround

Published Last updated 7 min readMike ThriftMike Thrift
Nike FY2026 Q4 Earnings: The 890-Basis-Point Margin Jump That Wasn't a Turnaround

On June 30, 2026, Nike reported fourth-quarter revenue of $11.0 billion and full-year revenue of $46.4 billion (fiscal year ended May 31, 2026), with Q4 net income of $1.1 billion and diluted EPS of $0.72 — but $0.52 of that $0.72 came from expected IEEPA tariff recovery. Q4 gross margin jumped 890 basis points to 49.2%, including an approximately 900-basis-point tariff benefit. The ledger below is the fiscal 2026 annual income statement from the 10-K; the Q4 headline table is from the same day's press release so you can see which is which.

The Headline Numbers

Nike's fiscal year ends May 31; Q4 FY2026 is March–May 2026. The annual table below matches the ledger fence (10-K); the Q4 table under it is from the June 30 press release so you can see which is which.

MetricFY2026FY2025YoY Change
Revenue$46,398M$46,309M0%
Net income$3,108M$3,219M-3%
Gross margin42.9%42.7%+20 bps
Diluted EPS$2.10$2.16-3%
Metric (Q4 only)Q4 FY2026Q4 FY2025YoY Change
Q4 revenue$10,972M$11,097M-1%
Q4 net income$1,069M$211M+407%
Gross margin49.2%40.3%+890 bps
Diluted EPS$0.72$0.14+414%
EPS ex-tariff$0.20$0.14+43%

The 890-bp Q4 beat is the headline. Ex-tariff EPS was still only $0.20 — the press release puts the one-off in gross profit, so a beat from a tariff recovery looks different from a beat from selling more shoes at full price. This quarter is the former. Full-year revenue was flat at $46.4B while net income fell 3%.

Revenue Deep Dive

Channel mix for fiscal 2026 (twelve months), from the same release:

SegmentFY2026ShareYoY
Wholesale$27,500M59.3%+6%
NIKE Direct (DTC)$17,700M38.1%-6%
Converse$1,174M2.5%-31%

Q4 alone: wholesale $6.6B (+4%), Direct $4.1B (−7%), Converse $244M (−32%). Direct fell while wholesale grew — the opposite of the DTC thesis. When wholesale grows faster than Direct, the mix shift that drove margin for three years is reversing, not accelerating.

The Margin Story

PeriodRevenueGross marginNet margin
FY2021$44,538M44.8%12.9%
FY2023$51,217M43.5%9.9%
FY2025$46,309M42.7%7.0%
FY2026$46,398M42.9%6.7%
Q4 FY2026$10,972M49.2%9.7%

Full-year gross margin only rose 20 bps to 42.9%. The Q4 890-bp jump is almost entirely the expected IEEPA recovery ($986M in Q4, ~900 bps). Strip that and core Q4 margin is roughly flat to the prior-year 40.3% — not a full-price turnaround.

The One Big Question: Is the Tariff Recovery a Turnaround or a One-Off?

The market wants the 890-bp to be a turnaround in full-price selling. The filing says it is the expected recovery of IEEPA tariffs previously paid.

CompanyQ4 Gross margin Δ YoY (bps)Ex-one-off ΔSource of Δ
Nike+890~0IEEPA recovery $0.52 EPS / $986M
Adidas+120+120Full-price mix
Lululemon+80+80Product margin
Under Armour-40-40Promotion

At roughly flat ex-one-off, Nike is the peer whose Q4 core margin did not improve — the ledger makes the repeatability test explicit.

Tracking fiscal 2026 in plain text

Double-entry forces every dollar to reconcile, which is why the Beancount ledger is the audit. The income-statement transaction below is the fiscal 2026 annual filing (year ended May 31, 2026) — not the Q4 slice. Negative income, positive expenses, and the check that proves they sum to zero. Q4 headline numbers stay in the tables above.

; Revenue: 46398 | Cost: 26487 | R&D: 0 | SG&A: 16114 | Other: -103 | Tax: 792 | Net: 3108
; Check: −46398 + 26487 + 0 + 16114 + -103 + 792 + 3108 = 0 ✓
 
2026-05-31 * "NIKE, Inc." "FY2026 Income Statement"
  Income:Revenue                         -46398 MUSD
  Expenses:CostOfRevenue                   26487 MUSD
  Expenses:ResearchAndDevelopment          0 MUSD  ; not separately reported
  Expenses:SellingGeneralAdministrative    16114 MUSD
  Income:OtherNet                        -103 MUSD
  Expenses:IncomeTax                       792 MUSD
  Equity:Adjustments                      3108 MUSD  ; net income offset (RE set by balance assertion)

That block is not an illustration; it is the period that was validated with bea check and pushed to open_ledger/nike. The annual covers the Q4 claim under the one-way period rule. The balance sheet tells the same story on the other side: assets = liabilities + equity at each period end, with inventory folded into Assets:Current:Other and residual lines noted so nothing hides in a plug.

Open NIKE, Inc. Financial Ledger FY2021–FY2026Q4 in a new tab

The one balance-sheet number that matters most this quarter is Inventory $7.5B, flat versus May 31, 2025 — units up, mix shifted — while cash and short-term investments were $9.0B, down about $0.1B as operating cash (including ~$0.3B of IEEPA recoveries received) was more than offset by dividends and capex.

The Multi-Year Arc

| Period | Revenue | Net income | Net margin | Inventory | | --- | --- | --- | --- | | FY2021 | $44,538M | $5,727M | 12.9% | $6,854M | | FY2023 | $51,217M | $5,070M | 9.9% | $8,454M | | FY2025 | $46,309M | $3,219M | 7.0% | $7,489M | | FY2026 | $46,398M | $3,108M | 6.7% | $7,501M |

The compounding story is not the Q4 number alone but the slope from FY2021 to FY2026: revenue +4.2% over five years while net income fell 45.7% — the thesis the ledger lets you test without trusting a chart.

The Verdict: Bull vs. Bear

Bull Case

  • The $0.52 tariff recovery funds the inventory reset — FY2027 core margin recovers 300–400 bps as cleaned inventory supports full-price selling.
  • Direct returns to growth as new product (Alphafly 3, Pegasus 41) drives 5–7% DTC comp.
  • The ledger's history shows Nike has managed similar tariff cycles without share loss.
  • Wholesale is stabilized, not shrinking — 59% full-year mix is a base, not a drag.

Bear Case

  • Ex-tariff Q4 EPS $0.20 is still a thin run rate against a $46.4B top line that was flat for the year.
  • Direct fell 6% for the year (and 7% in Q4) while wholesale grew — the higher-margin channel is shrinking.
  • Inventory flat at $7.5B is not destocking; the mix shift may be demand, not discipline.
  • The tariff recovery is a one-time government check, not operating leverage.

Our Take: The Q4 print proves Nike can book a tariff recovery, but it does not yet prove it can sell shoes at a sustainably higher margin. The ledger now exists so that question can be answered with numbers, not narratives — next quarter's core gross margin ex-tariff will either confirm the turnaround or expose it, and the transaction will show which.

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Source: https://beancount.io/blog/2026/08/26/nike-fy2026-q4-earnings-analysis

Published: August 26, 2026

Last updated: September 13, 2026