Nike’s fiscal third quarter came in ahead of Wall Street expectations, with wholesale channels rebounding and North America in growth. Gross margin pressure from North American tariffs and a sharp decline at Converse underline the work still ahead.
Nike posted third-quarter revenues of $11.3 billion for the period ended February 28, 2026, coming in ahead of analyst estimates and roughly flat with the same quarter a year earlier. The result offers measured encouragement for the brand’s ongoing turnaround under President and Chief Executive Elliott Hill, who took charge in October 2024, though profitability remained under pressure.
Nike beats revenue expectations as wholesale gains offset weaker Direct sales
Revenue came in at $11.279 billion, flat year-on-year on a reported basis but down 3 percent on a currency-neutral basis, underscoring weaker underlying demand. Analysts polled by LSEG had been looking for a 0.3 percent decline to about $11.24 billion.
| Line item | 9M FY2026 | 9M FY2025 | % change |
|---|---|---|---|
| Revenues | $35,426m | $35,212m | +1% |
| Cost of sales | $20,908m | $19,891m | +5% |
| Gross profit | $14,518m | $15,321m | –5% |
| Gross margin | 41.0% | 43.5% | |
| Demand creation expense | $3,551m | $3,436m | +3% |
| Operating overhead expense | $8,481m | $8,504m | 0% |
| Total selling & administrative expense | $12,032m | $11,940m | +1% |
| % of revenues | 34.0% | 33.9% | |
| Income before income taxes | $2,571m | $3,567m | –28% |
| Income tax expense | $532m | $559m | –5% |
| Effective tax rate | 20.7% | 15.7% | |
| Net income | $2,039m | $3,008m | –32% |
Beneath the steady headline number, Nike continued to pivot its sales mix. Wholesale revenue rose 5 percent to $6.5 billion (up 1 percent currency-neutral), led by North America as the company rebuilt ties with third-party retailers after years of prioritising direct-to-consumer channels. Nike Direct revenue slipped 4 percent to $4.5 billion, with Nike Brand Digital down 9 percent and Nike-owned stores off 5 percent, reflecting tighter discounting as much as softer traffic.
Regional performance: North America leads as China and Converse still lag
North America was the clear bright spot, with total revenues growing 3 percent to $5.026 billion, led by footwear up 6 percent. Europe, Middle East and Africa held up on a reported basis (+2 percent) but fell 7 percent in currency-neutral terms, reflecting the dollar’s relative strength.
Greater China remains a drag on the top line, with revenues down 7 percent to $1.615 billion (–10 percent currency-neutral) as the brand continues to lose share to domestic competitors including Anta and Li-Ning. One note of nuance: Greater China’s earnings before interest and taxes (EBIT) improved 11 percent to $467 million, suggesting Hill’s team is prioritizing margin recovery over volume in the region — a deliberate, if not yet complete, strategic reset.
| Region / category | 9M FY2026 | 9M FY2025 | % chg | % chg (currency-neutral) |
|---|---|---|---|---|
| North America | ||||
| Footwear | $10,087m | $9,580m | +5% | +5% |
| Apparel | $4,765m | $4,534m | +5% | +5% |
| Equipment | $827m | $755m | +10% | +10% |
| Total | $15,679m | $14,869m | +5% | +5% |
| Europe, Middle East & Africa | ||||
| Footwear | $5,822m | $5,676m | +3% | –3% |
| Apparel | $3,228m | $3,042m | +6% | 0% |
| Equipment | $547m | $539m | +1% | –5% |
| Total | $9,597m | $9,257m | +4% | –2% |
| Greater China | ||||
| Footwear | $3,250m | $3,731m | –13% | –14% |
| Apparel | $1,201m | $1,244m | –3% | –5% |
| Equipment | $99m | $135m | –27% | –27% |
| Total | $4,550m | $5,110m | –11% | –12% |
| Asia Pacific & Latin America | ||||
| Footwear | $3,263m | $3,338m | –2% | –3% |
| Apparel | $1,209m | $1,143m | +6% | +5% |
| Equipment | $175m | $195m | –10% | –11% |
| Total | $4,647m | $4,676m | –1% | –2% |
| Global Brand Divisions | $25m | $39m | –36% | –34% |
| Total Nike Brand | $34,498m | $33,951m | +2% | 0% |
| Converse | $930m | $1,335m | –30% | –32% |
| Corporate | ($2m) | ($74m) | — | — |
| Total Nike, Inc. Revenues | $35,426m | $35,212m | +1% | –1% |
Converse deserves a separate reading. Revenues at the subsidiary fell 35 percent to $264 million, with declines across every territory. The brand swung to an EBIT loss of $40 million in the quarter, against a $39 million profit a year earlier. No strategic repositioning was announced in the earnings release.
Margin under pressure
Gross margin fell to 40.2 percent. Nike said the decline was driven mainly by higher tariffs in North America, which it expects to continue to weigh on results through the rest of the calendar year. Selling and administrative expense rose 2 percent to $4.0 billion, including employee severance costs.
Net income dropped 35 percent to $520 million. Nike said the year-on-year comparison was affected by a one-time, non-cash tax benefit in the prior-year quarter that pushed the effective tax rate to 5.9 percent; the rate was 20.0 percent this quarter.
Progress, but reset continues
Hill and Chief Financial Officer Matthew Friend said the turnaround is showing early signs of traction, while restructuring actions under the “Win Now” program are expected to continue to affect reported results in the near term.
The quarter highlighted a shift in momentum across channels. Nike’s wholesale business expanded as the company rebuilt relationships with third-party retailers, while its direct business remained under pressure as digital traffic and store sales declined.
“The work is not finished, but the direction is clear, our teams are moving with focus and urgency,” Hill said.
SGI Europe will publish an in-depth strategic analysis of Nike’s Q3 results and their implications for the broader sporting goods market in the coming hours.
