Have you ever watched a sports team pull off an unexpected comeback, turning the game around when everyone thought they were down for the count? That’s exactly what’s happening with Nike right now. The sportswear giant, under the fresh leadership of CEO Elliott Hill, just dropped a quarterly earnings report that sent its stock soaring in after-hours trading. It’s the kind of moment that makes investors sit up and take notice, and honestly, it’s hard not to get a little excited about what’s unfolding.
Nike’s Big Win: A Turnaround in Full Sprint
The numbers don’t lie, and Nike’s latest earnings are a slam dunk. The company posted a 1% year-over-year revenue increase to $11.72 billion in its fiscal 2026 first quarter, blowing past Wall Street’s expectations of $11 billion. Sure, earnings per share took a hit, dropping 30% to 49 cents, but that still beat the consensus estimate of 70 cents. Investors responded with enthusiasm, pushing the stock up over 4% to around $72.66 in extended trading. It’s a sign that the market believes in Nike’s direction under Hill’s leadership.
So, what’s driving this momentum? In my view, it’s all about execution. Nike’s been navigating a tricky landscape—think tariffs, shifting consumer habits, and fierce competition from brands like Adidas and Lululemon. Yet, Hill’s strategy is proving to be a game-changer, blending innovation with a renewed focus on wholesale partnerships. Let’s break down the key plays that are putting Nike back on top.
Leadership That Delivers: Elliott Hill’s Vision
When Elliott Hill stepped back into Nike’s CEO role in October 2024, he brought with him decades of experience with the company. This isn’t just a new face in the corner office—it’s a leader who knows Nike inside and out. Hill’s approach is all about focusing on what makes Nike, well, Nike: cutting-edge products, athlete-driven innovation, and a brand that resonates globally.
We’re getting back to delivering a relentless flow of innovation that serves real athlete needs, and we’re pulling it all the way through the marketplace in consumer-friendly ways.
– Nike’s CEO
Hill’s not just talking the talk. The company’s “Win Now” initiative is a prime example, zeroing in on high-performing categories like running, which saw over 20% growth this quarter. By aligning the organization closer to athletes and their needs, Nike’s rediscovering its edge. It’s like watching a marathon runner find their second wind—suddenly, the finish line feels a lot closer.
Wholesale Makes a Comeback
One of the boldest moves under Hill’s leadership has been the pivot back to wholesale partnerships. For years, Nike leaned heavily into its direct-to-consumer model, but that focus left key retail partners like Dick’s Sporting Goods and Foot Locker out in the cold. Hill recognized that balance is key, and the results are already showing.
In North America, Nike’s wholesale business grew by 5% year-over-year on a currency-neutral basis. Even more exciting? The company’s return to selling on a major online marketplace (let’s just say it’s a giant in retail) is exceeding expectations, driving stronger engagement and sales. This strategic shift is like opening a new playbook—Nike’s not abandoning its direct channels, but it’s making sure all players on the team are getting the ball.
Innovation: The Heart of Nike’s Game Plan
If there’s one thing Nike’s always been known for, it’s innovation. From Air Max to Flyknit, the brand has a history of pushing boundaries. Under Hill, that legacy is getting a fresh boost with what the company calls its “sport offense.” This strategy is all about creating products that resonate with athletes, from weekend warriors to Olympians.
The early results are promising. Running, one of Nike’s core categories, is seeing explosive growth, thanks to new products designed with real athlete feedback. It’s not just about flashy designs—Nike’s doubling down on performance, ensuring every shoe and piece of apparel delivers. As someone who’s laced up a pair of Nikes for a morning jog, I can tell you there’s something special about a brand that feels like it’s running alongside you.
Navigating the Tariff Tightrope
Of course, no comeback story is without its hurdles. Nike, like many global brands, is grappling with the impact of tariffs, especially given its reliance on Southeast Asia for manufacturing. The company recently upped its estimate of tariff-related costs to $1.5 billion annually, a jump from the previous $1 billion. That’s expected to shave about 120 basis points off gross margins this fiscal year.
But here’s where Nike’s showing its smarts. The company’s already taking steps to mitigate these costs, like optimizing its supply chain and reducing reliance on Chinese footwear imports from 16% to a high single-digit percentage by the end of fiscal 2026. They’re also working closely with suppliers and retail partners to manage costs and have rolled out selective price increases. It’s a delicate balancing act, but Nike’s leadership seems confident they can keep things on track.
I remain confident in our ability to leverage our strengths, our scale, and the deep experience of our leadership team to navigate through this disruption.
– Nike’s CFO
The Road Ahead: Challenges and Opportunities
Turnarounds are rarely a straight line, and Nike’s no exception. While the company’s off to a strong start, there are still challenges to tackle. For one, the Greater China market and the Converse brand need some extra love to return to profitable growth. Then there’s the digital side—Nike’s website, while less emphasized now, remains a critical piece of the puzzle. And let’s not forget about inventory management, which can make or break margins in a competitive market.
That said, there’s plenty to be bullish about. Nike’s spring order book is up compared to last year, signaling growing demand in its wholesale channel. The company’s also expecting modest growth in this area for the full fiscal year, which is music to investors’ ears. It’s proof that Hill’s pivot back to wholesale was the right call, even if it means accepting some short-term declines in direct-to-consumer sales.
What’s Next for Nike Investors?
So, what does all this mean for investors? Nike’s recent performance is a clear signal that the company’s on the right track, but it’s not time to pop the champagne just yet. The second-quarter guidance paints a more cautious picture: revenues are expected to dip by a low single-digit percentage, with gross margins taking a hit of about 300 to 375 basis points, largely due to tariffs. Marketing spending is also set to ramp up, which could pressure short-term profitability but fuel long-term growth.
Still, the bigger picture is bright. Nike’s ability to exceed expectations, coupled with Hill’s clear vision, makes it a compelling pick for those willing to ride out some bumps. The company’s new price target of $85 (up from $80) reflects growing confidence in its trajectory, and I wouldn’t be surprised to see investors scaling into this stock as the turnaround gains steam.
Key Takeaways for Nike’s Turnaround
- Strong earnings beat: Revenue and EPS surpassed Wall Street expectations, boosting stock performance.
- Wholesale revival: Partnerships with key retailers are driving growth, with North America up 5%.
- Innovation focus: The “Win Now” initiative and “sport offense” are fueling gains in categories like running.
- Tariff challenges: Increased costs are a headwind, but Nike’s mitigation strategies show promise.
- Cautious optimism: While progress is evident, challenges in China and Converse remain.
Perhaps the most exciting part of Nike’s story is the sense of momentum. It’s like watching an underdog team rally in the final quarter, and with Hill at the helm, Nike’s playing to win. Will they keep up the pace? Only time will tell, but for now, the swoosh is looking stronger than ever.
| Metric | Expectation | Actual Result |
| Revenue Growth | Mid-single-digit decline | 1% increase |
| Gross Margin | Decline of 350-425 bps | Decline of 320 bps |
| SG & A Expenses | Low-single-digit increase | 1% decrease |
In the end, Nike’s story is one of resilience and reinvention. The company’s not just running the race—it’s setting the pace. For investors, athletes, and fans alike, it’s a reminder that with the right strategy, even the toughest challenges can lead to a podium finish.
