Adidas Group (AO) | Buy | Nike's FY26 results - sales to still decline in CY26

Research evidence excerpt

Adidas Group (AO) | Buy | Nike's FY26 results - sales to still decline in CY26

roup performance, adjusted for USD986m tariff refund, came in better than expected. Sales were 1.1% above street

estimates, the gross margin (adjusted) was 12bps better, and the adjusted profit was 34% above consensus.

Nike's North American market in Q4 saw sales growth of 3%, driven by a 10% growth to wholesale partners but a 6% decline in its

DTC (Direct To Consumer, own retail) business. The international business remains weak with sales declining by 7% (cFX).

Nike recorded tariff refunds of USD986m, of which USD300m were booked as cash and the remainder booked as accounts

receivable. The refund compensates IEEPA tariffs, which Nike paid throughout FY26.

In its Q4 call, Nike again stressed its multi-stage recovery program, which started with its sports performance focus. Here it stated

that it has seen notable improvements for example in its running segment were it claims double-digit growth rates over the last

five consecutive quarters. However, the lifestyle business (Sportswear) and the Jordan business continue to suffer and need more

recalibration. Jordan sales in FY26 declined 3% YOY (cFX).

During the quarter, Nike saw a "strong" start in March, but as of mid-April, trends decelerated with demand especially in the

Sportswear segment down double digit in the quarter.

Outlook: Nike guided for its next two quarters, which cover the calendar year 2026. It expects sales to decline by low to mid-single

digits and Q2 (ends in November) to be weaker than Q1 due to higher comps. This guidance marks a deterioration from the initial

guidance of a low single-digit sales decline for 2026. But it reiterated that earnings will be flattish over that period, and gross