Key Highlights
- Nike surpassed Q3 earnings and revenue projections but issued disappointing Q4 guidance
- Company forecasts Q4 revenue decline of 2%–4%, contrasting with analyst expectations of a 1.9% increase
- Greater China sales slid 7% to $1.62B — marking the seventh consecutive quarterly decline, with a projected 20% plunge next quarter
- Gross profit margin contracted 1.3 percentage points to 40.2%, impacted by elevated North American tariffs
- NKE shares dropped more than 9% in Wednesday’s premarket session, hovering near $47.88
Nike delivered a strong third-quarter performance on Tuesday, yet Wall Street reacted with disappointment. The sportswear titan’s shares tumbled after management presented a pessimistic revenue forecast and highlighted persistent challenges in the Chinese market.
Chief Financial Officer Matt Friend indicated that the company anticipates fourth-quarter revenue to decline between 2% and 4%. This stands in stark contrast to analyst consensus projecting a 1.9% gain. Looking at the full calendar year, Nike now forecasts a low single-digit percentage revenue contraction.
The company reported third-quarter earnings of 35 cents per share with revenue reaching $11.28 billion. Market analysts had projected earnings between 28–30 cents on revenue of $11.23–11.24 billion. While the results exceeded expectations, the forward-looking guidance dominated investor attention.
Quarterly net income plummeted 35% year-over-year to $520 million, compared with $794 million in the same period last year. Gross margin compressed by 1.3 percentage points to 40.2%, with Nike attributing the pressure primarily to increased tariff costs across North American operations.
Chinese Market Woes Continue
Greater China revenue decreased 7% to $1.62 billion, representing the seventh straight quarter of contraction. Nike now anticipates a steep 20% decline in this critical market during the fourth quarter. With the region contributing approximately 15% of Nike’s worldwide revenue, this trajectory presents a significant headwind.
Barclays analyst Adrienne Yih noted that the primary concern centers on “the depth and slow speed of a very deliberate Greater China reset, likely to take four quarters to return to growth.” She suggested the stock will “likely to be range-bound in the near term” but identified price points below $50 as compelling opportunities for patient investors.
Nike faces intensifying competition in China from domestic brands Anta and Li Ning, while also confronting global pressure from emerging competitors like On Running and Hoka.
North American performance provided a bright spot. Revenue in the region advanced 3% to $5.03 billion, narrowly missing the $5.04 billion consensus. Wholesale revenue jumped 5% to $6.5 billion, while direct-to-consumer sales declined 4% to $4.5 billion — a pattern consistent with CEO Elliott Hill’s strategic pivot toward strengthening wholesale partnerships.
Transformation Underway
Hill, who rejoined Nike as chief executive in late 2024, has maintained transparency that the company’s revival will require patience. During Tuesday’s earnings call, he emphasized that “the pace of progress is different across the portfolio.”
Friend also highlighted external headwinds, including geopolitical instability in the Middle East and climbing oil prices, which threaten to impact both manufacturing costs and consumer purchasing power. He emphasized that Nike’s outlook reflects present-day conditions and remains subject to change.
Nike shares have declined 15.8% since the start of 2025 and are down an additional 17.1% year-to-date. Frankfurt-listed shares fell 8.7% at Wednesday’s market open.
Jefferies analysts, under the leadership of Randal Konik, characterized the third quarter as evidence of “steady progress” with improved inventory management and growing traction in North American wholesale channels, while recognizing that China and Nike Digital represent “areas to work through.”
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