Key Highlights
- Nike exceeded third-quarter earnings and revenue projections while issuing conservative fourth-quarter guidance
- Fourth-quarter revenue projected to decline 2%–4%, while analysts anticipated 1.9% growth
- Greater China revenue declined 7% to $1.62 billion, marking the seventh consecutive quarterly decrease, with forecasts calling for a 20% decline in the upcoming quarter
- Gross margin contracted 1.3 percentage points to 40.2%, impacted by elevated tariff costs in North America
- Nike shares declined more than 9% during Wednesday’s premarket session, hovering near $47.88
Nike delivered impressive third-quarter results on Tuesday, yet investors responded with heavy selling. The athletic apparel giant’s cautious sales projections and ongoing difficulties in the Chinese market triggered a significant downturn.
CFO Matt Friend disclosed that Nike anticipates fourth-quarter revenue to contract between 2% and 4%. Analysts had projected revenue growth of 1.9%. Looking at the full calendar year, Nike forecasts sales declining by a low single-digit percentage.
Third-quarter performance showed earnings of 35 cents per share alongside revenue of $11.28 billion. Wall Street consensus had called for 28–30 cents per share and revenue between $11.23–11.24 billion. The company surpassed expectations, though forward guidance dominated investor attention.
Quarterly net income decreased 35% year-over-year to $520 million, compared with $794 million in the prior year period. Gross margin compressed 1.3 percentage points to 40.2%, with management attributing the pressure primarily to increased tariff expenses in North America.
Chinese Market Challenges Persist
Greater China revenue contracted 7% to $1.62 billion, extending the decline streak to seven consecutive quarters. Nike anticipates a 20% revenue drop in that geography during the fourth quarter. Given that the region represents approximately 15% of Nike’s worldwide revenue, this projection carries significant weight with investors.
Barclays analyst Adrienne Yih highlighted that “the depth and slow speed of a very deliberate Greater China reset, likely to take four quarters to return to growth” stood out as the primary concern. She suggested the stock will “likely be range-bound in the near term” while characterizing price levels below $50 as compelling for investors with longer time horizons.
Nike faces intensifying competition in China from domestic brands Anta and Li Ning, alongside growing global rivalry from On Running and Hoka.
North America showed resilience. Revenue in that region increased 3% to $5.03 billion, narrowly missing the $5.04 billion projection. Wholesale revenue advanced 5% to $6.5 billion, while direct sales decreased 4% to $4.5 billion—illustrating CEO Elliott Hill’s strategic shift toward strengthening wholesale partnerships.
Recovery Remains Underway
Hill, who rejoined Nike as CEO in late 2024, has maintained transparency that the transformation requires patience. He remarked Tuesday that “the pace of progress is different across the portfolio.”
Friend highlighted additional external challenges, including instability in the Middle East and climbing oil prices, which threaten to impact both production costs and consumer purchasing power. He emphasized that Nike’s projections account for present circumstances and remain subject to change.
Nike shares have declined 15.8% in 2025 and dropped an additional 17.1% year-to-date. Frankfurt-listed shares opened Wednesday down 8.7%.
Jefferies analysts, led by Randal Konik, characterized the third quarter as evidence of “steady progress” with improved inventory management and growing traction in North America and wholesale channels, while recognizing that China and Nike Digital represent “areas to work through.”
