Nike (NKE) Q3 2025 Earnings

Nike Warns of Double-Digit Sales Drop in Current Quarter Due to Tariffs and Sliding Consumer Confidence

Nike, the world’s largest sportswear brand, warned that its sales will drop by a double-digit percentage in its current quarter as the company faces new tariffs, sliding consumer confidence, and a slower-than-expected turnaround.

Weak Guidance

In a conference call with analysts, finance chief Matt Friend said Nike expects its sales decline in the fiscal fourth quarter, which is set to end in May, to be at the "low end" of the "mid-teens range." The company also anticipates its gross margin will fall between 4 and 5 percentage points as it ramps up efforts to liquidate excess inventory and stale styles that are no longer resonating with consumers.

Worse-than-Expected Guidance

The guidance is far worse than analysts had expected. Consensus estimates from LSEG show Wall Street had expected sales to be down 11.4% in the current quarter.

Fourth-Quarter Performance

The company’s reported net income for the three-month period that ended Feb. 28 was $794 million, or 54 cents per share, compared with $1.17 billion, or 77 cents per share, a year earlier.

Headwinds to Revenue and Gross Margin

"We believe that the fourth quarter will reflect the largest impact from our … actions, and that the headwinds to revenue and gross margin will begin to moderate from there," said Friend. "We are also navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile foreign exchange rates, and tax regulations, as well as the impact of this uncertainty and other macro factors on consumer confidence."

Quarterly Results

Here’s how the company performed during the quarter, compared with estimates from analysts polled by LSEG:

• Earnings per share: 54 cents vs. 29 cents estimated
• Revenue: $11.27 billion vs. $11.01 billion estimated

Competitive Landscape

The company’s sales dropped 9% to $11.27 billion, down about 9% from $12.4 billion a year earlier. Like other retailers, Nike saw strong demand in December followed by "double-digit" declines in January and February.

CEO’s Assessment

During the quarter, Nike’s gross margin fell by 3.3 percentage points to 41.5%, lower than expectations of 41.8%, according to StreetAccount. That’s largely because of the costs associated with Nike’s efforts to clear out old inventory in favor of new, innovative styles.

Conclusion

Nike’s turnaround plan is expected to be challenging, especially with the new tariffs and economic fears. However, the company’s ability to reignite innovation and create industry-leading shoes and apparel will be key to its recovery. Hill’s focus on winning back wholesale partners, reigniting innovation, and wooing back athletes that have fled to new competitors is a step in the right direction.

Frequently Asked Questions

Q: What is the expected impact of the new tariffs on Nike’s margins?
A: The company didn’t specify how the new duties would affect its margins.

Q: How will Nike address consumer confidence issues?
A: The company is focusing on creating new, innovative products and partnering with popular brands like Skims to attract female consumers.

Q: What is the outlook for Nike’s turnaround plan?
A: The company’s ability to reignite innovation and create industry-leading shoes and apparel will be key to its recovery.