Key Highlights
- Nike surpassed third-quarter profit and revenue projections but issued disappointing fourth-quarter guidance
- The company forecasts Q4 revenue will decline 2%–4%, contradicting Wall Street’s projection of a 1.9% increase
- Greater China sales fell 7% to $1.62 billion—marking the seventh consecutive quarterly decline, with projections of a 20% plunge in the coming quarter
- Profit margins contracted by 1.3 percentage points to 40.2%, pressured by escalating tariff costs in North America
- Shares dropped more than 9% during premarket hours Wednesday, hovering near $47.88
Nike delivered better-than-expected third-quarter results on Tuesday, but Wall Street wasn’t buying it. The sportswear giant’s shares took a beating after management issued a pessimistic revenue forecast and highlighted persistent challenges in the Chinese market.
Chief Financial Officer Matt Friend projected that fourth-quarter revenue would contract between 2% and 4%. This stands in stark contrast to analyst estimates, which had anticipated a 1.9% uptick. Looking at the broader picture, Nike now anticipates full calendar year sales will retreat by a low single-digit percentage.
The company reported third-quarter earnings of 35 cents per share with revenue reaching $11.28 billion. Market watchers had been expecting earnings between 28–30 cents per share on revenue of $11.23–11.24 billion. While the numbers represented a clear victory, the forward-looking statements dominated investor attention.
Quarterly net profit plummeted 35% from the prior year to $520 million, compared with $794 million twelve months earlier. The company’s gross profit margin compressed by 1.3 percentage points to 40.2%, with management citing elevated tariff expenses in North America as the primary pressure point.
Chinese Market Troubles Deepen
Revenue from Greater China declined 7% to $1.62 billion, representing the seventh straight quarter of contraction in the critical market. Management is now preparing for an even steeper 20% revenue drop in that region during the fourth quarter. Given that China represents approximately 15% of Nike’s worldwide revenue, this trajectory has significant implications.
Barclays analyst Adrienne Yih noted that the critical insight was “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 would “likely be range-bound in the near term” while identifying price points below $50 as compelling opportunities for patient, long-term shareholders.
Nike faces intensifying competition in China from domestic brands Anta and Li Ning, while also confronting growing global challenges from emerging players like On Running and Hoka.
The North American market provided some relief. Regional revenue advanced 3% to $5.03 billion, narrowly missing the $5.04 billion consensus. Wholesale channel revenue jumped 5% to $6.5 billion, whereas direct-to-consumer sales dropped 4% to $4.5 billion—a shift that aligns with CEO Elliott Hill’s strategic pivot back toward wholesale distribution partners.
Recovery Remains a Work in Progress
Hill, who rejoined Nike as chief executive at the close of 2024, has consistently communicated that the transformation will require time. During Tuesday’s earnings call, he acknowledged 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, factors that could impact both manufacturing costs and consumer demand. He emphasized that the company’s projections are based on present circumstances and remain subject to revision.
Nike shares have declined 15.8% in 2025 and have dropped an additional 17.1% year-to-date. The company’s Frankfurt-listed securities 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 strengthening momentum in North America and wholesale channels, while recognizing that China and Nike Digital continue to present “areas to work through.”
