Key Highlights
- Nike surpassed Q3 earnings and revenue projections but issued disappointing Q4 guidance
- Fourth-quarter sales projected to decline 2%–4%, contrasting with Wall Street’s expectation of a 1.9% increase
- Greater China sales fell 7% to $1.62B — marking the seventh consecutive quarterly decline, with management forecasting a 20% drop in the upcoming quarter
- Gross profit margin contracted 1.3 percentage points to 40.2%, pressured by elevated North American tariffs
- Nike shares plummeted more than 9% during Wednesday’s premarket session, hovering near $47.88
Nike delivered a strong third-quarter performance on Tuesday, but investors weren’t buying it. The stock took a beating as the athletic apparel giant issued pessimistic forward guidance and warned of persistent headwinds in its crucial Chinese market.
CFO Matt Friend disclosed that Nike anticipates fourth-quarter sales will contract between 2% and 4%. This stands in stark contrast to Wall Street’s consensus forecast of a 1.9% gain. For the complete calendar year, the company now projects sales will decline by a low single-digit percentage.
Third-quarter results showed earnings of 35 cents per share alongside revenue of $11.28 billion. Consensus estimates had called for 28–30 cents per share and $11.23–11.24 billion in revenue respectively. Despite these solid numbers, the forward-looking statements dominated investor sentiment.
Quarterly net income plunged 35% year-over-year to $520 million, compared to $794 million in the prior-year period. Gross profit margin compressed 1.3 percentage points to 40.2%, with management citing elevated North American tariffs as the primary pressure point.
Chinese Market Continues Downward Spiral
Greater China revenue contracted 7% to $1.62 billion, representing the seventh straight quarter of deterioration. Management is now preparing for a dramatic 20% decline in that region during the fourth quarter. Given that China represents approximately 15% of Nike’s worldwide revenue, this trajectory has significant implications that investors cannot ignore.
Barclays analyst Adrienne Yih characterized the situation as reflecting “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 be range-bound in the near term” while identifying price levels below $50 as compelling entry opportunities for patient, long-term investors.
Nike faces intensifying competition in China from domestic brands Anta and Li Ning, while simultaneously confronting growing global rivalry from On Running and Hoka.
The North American segment provided a bright spot. Revenue in that region increased 3% to $5.03 billion, marginally below the $5.04 billion analyst estimate. Wholesale revenue advanced 5% to $6.5 billion, while direct-to-consumer sales declined 4% to $4.5 billion — a reflection of CEO Elliott Hill’s strategic pivot back toward wholesale distribution channels.
Recovery Remains Works in Progress
Hill, who rejoined Nike as chief executive in late 2024, has maintained transparency that the turnaround will require patience. During Tuesday’s call, he noted that “the pace of progress is different across the portfolio.”
Friend also highlighted external uncertainties, including geopolitical instability in the Middle East and climbing oil prices, which threaten to impact both manufacturing costs and consumer discretionary spending. He emphasized that Nike’s projections incorporate current market conditions and remain subject to revision.
Nike stock has declined 15.8% in 2025 and has surrendered an additional 17.1% year-to-date. Shares trading on the Frankfurt exchange fell 8.7% at Wednesday’s opening bell.
Jefferies analysts, under the leadership of Randal Konik, characterized the third quarter as demonstrating “steady progress” with improved inventory management and strengthening momentum in North America and wholesale channels, while conceding that China and Nike Digital continue to represent “areas to work through.”
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