Nike reports on Thursday, and small investors are still betting on a turnaround

Nike will report its results for the three months to August on Thursday 1 October, at about 22:15 Tirane time, after the market closes in New York, the company said. They are the first results under David Denton, the finance chief, who joined from Pfizer on 17 August. They also come almost two years after Elliott Hill returned to run the company in October 2024.

Analysts expect another fall. The consensus is for revenue of $11.33bn, down from $11.72bn a year earlier, and earnings of 44 cents a share, down from 49 cents, according to TipRanks. That is close to Nike’s own forecast. In June the finance chief told analysts to expect reported revenue “down low to mid single digits” and a gross margin “slightly positive” on a year earlier, according to the call transcript.

A hard September

The weeks before the results were bad for the brand. On 21 September Nike left the S&P 100, the index of the largest US companies, and Dell, Palo Alto Networks, Arista Networks and Sandisk joined. Nike had been a member for almost 18 years, Fortune noted. It stays in the S&P 500.

Three days earlier, Kylian Mbappé ended a partnership with Nike that began in 2006 and signed with On, the Swiss brand, which plans its first football boots for next year. On the same day Converse, which Nike owns, pulled an Instagram advert and apologised after critics said the image evoked the Ku Klux Klan and lynching. “We got this wrong,” the company said.

The market has kept score. Nike’s shares were down 42% this year before trading on 29 September, and they closed at $35.40 on 30 September. That is about 80% below the $179.10 they reached at the peak in November 2021.

What the last quarter showed

The results in June showed where the trouble is. Revenue in the three months to May fell 1% to $11.0bn, Nike reported. Sales to wholesale partners rose 4%, as Hill rebuilt ties with the shops that Nike had cut back under his predecessor. Sales through Nike’s own shops, website and apps fell 7%. Greater China fell 12%, or 17% at constant exchange rates, and Converse fell 32%.

Profit looked better than it was. Earnings of 72 cents a share included 52 cents from the expected refund of emergency tariffs. Without the refund, earnings were about 20 cents a share. The tariff refund also added about 9 percentage points to the quarter’s gross margin of 49.2%.

China is the market to watch. From January, Nike will close most of the more than 1,000 online storefronts that its partners run on Chinese platforms, Retail Dive reported. It will sell online only through its own app and website and its flagship stores on Tmall, JD.com and Douyin. Topsports, one of the partners, said that online sales of Nike goods made up 22% of its revenue.

Small investors are more patient than Wall Street

Brokers are divided. Of the 30 analysts that TipRanks tracks, 8 rate the shares a buy, 16 a hold and 6 a sell, and their average price target is $44.12. Jefferies, one of the most positive, expects revenue of $11.5bn and earnings of 48 cents on Thursday, with a price target of $75.

Small investors see more of a comeback. In a poll on Stocktwits in August, 68% of the investors who answered said they would buy Nike rather than Lululemon, the other large sportswear company that is trying to recover. About 3% of the 879,346 portfolios that TipRanks tracks hold Nike, and that number rose by 0.9% over the past 30 days, even as the share price fell.

Part of the appeal is the income. Nike declared a dividend of 41 cents a share in its latest quarter. Four payments at that rate come to $1.64 a year, a yield of about 4.6% at the price of 30 September. The bet for these investors is that the brand is worth far more than the business now earns, and that the dividend pays them to wait.

What to watch

On Thursday, four things matter most: sales in Greater China before the switch in January, whether gross margin rises as Nike promised, any change to the outlook for the year, and the first comments from Denton. The larger test comes later. Nike plans an investor day in November, and Jefferies expects it to set out the longer-term targets that the market wants. Until then, the shares depend on proof that the turnaround has begun to show up in the numbers.