Nike expects declining sales despite World Cup boost – stock falls sharply

According to the company, a central reason for the increase in earnings was the refund of US import duties after the corresponding orders issued by US President Donald Trump were struck down by the Supreme Court of the United States. These one-time effects, however, overshadowed the underlying business performance and failed to convince investors.

Stock market losses

On the stock exchange, the latest figures are meeting skepticism. Nike shares lost more than four percent in US pre-market trading. Competitors' stocks also came under pressure: Adidas shares fell by up to 1.8 percent during trading and were thus among the weakest performers in the DAX. Puma shares lost a similar amount.

Nike CEO Elliott Hill pointed to a positive effect from the ongoing soccer World Cup, which is being partly held in Nike's US home market, during Tuesday evening's analyst conference call. Already at the start of the tournament, the company had sold two-and-a-half times more national team items than at the same point during the previous World Cup in 2022. The group is the kit supplier of the US national team and will replace Adidas as the kit supplier of the German Football Association (DFB) next year.

World Cup as a growth pillar

CFO Matthew Friend described consumer sentiment in stark terms: "Unsere Kunden sind rund um die Welt unter Druck." Nike does not expect consumer sentiment to improve over the next six months. These strains are also clearly noticeable in the sporting goods business.

Nike has been climbing out of a largely self-inflicted trough for over a year. In recent years, the group had focused heavily on direct sales at the expense of wholesale. As a result, competitors had regained shelf space, particularly in the US market. CEO Hill has therefore announced a stronger focus on athletes and sports, after the lifestyle share of the product range had grown in recent years.

Headwinds in China and the United States

The Greater China region also recorded a revenue decline in the quarter just ended. Revenue in China, however, came in at around 1.3 billion US dollars, above average analyst expectations. Citigroup analyst Monique Pollard noted that Nike had reduced inventory levels in China, which lessens the pressure to grant discounts – a circumstance that is also positive for Adidas and Puma.

The market reaction was nevertheless muted. Matthew Boss, an analyst at JPMorgan, pointed out that Nike expects a low- to mid-single-digit percentage revenue decline for the current first quarter of fiscal 2026/27, which ends in late August. The consensus analyst estimate for this quarter had already stood at a decline of 1.9 percent.

Analysts see recovery delayed

Brooke Roach, an analyst at Goldman Sachs, said Nike's revenue recovery is being delayed once again and that the cautious outlook is overshadowing the positive factors of the past quarter. Investors evidently see above all the risks for the coming months.

Just three months earlier, Nike had pointed to risks stemming from the Iran war, which could lead, for example via rising oil prices, to unplanned fluctuations in consumer behavior. These geopolitical uncertainties are hitting a consumer sector that is already under strain.

Nike sees consumers worldwide under pressure – this assessment by the group is consistent with the cautious signals coming from the quarterly report. The combination of consumer restraint, competitive pressure, and geopolitical risks leaves management with the task of consistently implementing the strategic shift toward a greater focus on athletes that has been initiated.

Outlook for the coming quarters

With the change in the DFB kit contract and the home advantage of hosting the World Cup, Nike does have two visible growth levers. Whether these will suffice to offset the headwinds in the Chinese market and the strains in the US wholesale business will have to be shown in the coming quarters. The share price initially reacted sharply negatively.

Overall, the report illustrates the discrepancy between profits supported by one-off effects and the still fragile revenue dynamics. Investors reward short-term profit jumps less when the outlook for the following quarter comes in more cautious than hoped.

The coming weeks will show whether the World Cup effect persists beyond the initial tournament weeks and whether the Christmas business in the second half of the fiscal year can provide relief. Until then, sentiment on the stock market remains tense – not only at Nike, but across the entire sporting goods sector.