Nike’s Q3 result $11.3bn, down 9% – Hill: ‘We’re on the right path’

Reporting a second consecutive quarter with a double-digit Ebit decline and faced with the unenviable task of resetting a product portfolio amid macro uncertainties, Nike is meeting the challenge head-on, with CEO Elliott Hill promising the company “can and will do better.”

“It’s our responsibility to grow the overall market,” Hill told analysts yesterday as he outlined developments underway to revitalize Nike’s business with consumers and wholesalers alike. But he did not promise a quick fix. It will likely be spring 2026 before Nike’s complete, updated product pipeline is introduced and all excess inventory in the marketplace is cleaned up.

In the meantime, as the company continues to introduce new innovative products tied to sport and trims its revenue reliance on a handful of classic styles, there will be more pain to endure. Nike is forecasting the largest negative impact on its “Win Now” strategy to occur in Q4, ending May 31. Year-over-year revenues are forecast to decline in the “mid-teens,” hurt by unfavorable shipping costs, and gross margin is expected to tumble by 400 to 500 basis points, partly because of new tariffs on US imports from China and Mexico.

Nike will implement its new strategic priorities, including new product innovations and stronger premium presentations, in three countries and five markets immediately – the US, China and the UK, on the one hand, and New York, London, Los Angeles, Beijing and Shanghai, on the other.

Analysts weigh in ahead of Q3 results

Analysts were generally upbeat on Nike’s turnaround-strategy progress during Hill’s first 150 days on the job, as the company prepared to detail its Q3 results.

Needham analyst Tom Nikic wrote, “[Nike] Management is clear-headed about the mistakes they’ve made, and are working aggressively to correct them. We believe Nike has the potential to be a compelling story stock in 2025, especially if numbers find a bottom and investors latch on to Mr. Hill as Nike’s proverbial white knight.”

Meanwhile, Bank of America analysts, on the group’s prospects, wrote, “Management is moving quickly to reset the marketplace and clear aged inventory to allow a pipeline of new product to hit the market.”

As of the market close yesterday, Nike’s shares were down 1.9 percent since the start of 2025 and nearly 26 percent year-over-year.

A closer look at Q3 results

Year-over-year Ebit was down by 40 percent at $844 million as net income slipped by 32 percent to $794 million from $1,172 million for the period ended Feb. 28. Revenues tumbled by 9 percent to $11,269 million rom $12,429 million. Gross margin was down by 330 basis points to 41.5 percent from 44.8 percent, because of higher discounts, product costs and higher inventory obsolescence. Inventory down by 2 percent to $7,539 million.

Nike Brand revenues slipped by 6 percent on a constant-currency basis to $10.9 billion. Sales were strong in the December holiday month but fell by double-digits in both January and February as the company significantly pared back promotion days in the EMEA and North America. Direct revenues slipped by 10 percent to $4.7 billion as wholesale sales contracted by 4 percent to $6.2 billion. Investment house Raymond James reported that foot traffic in Nike stores was down by 11 percent during the period and downloads of the Nike app contracted by 35 percent from the prior year.

Hill said running was a standout for the brand in Q3, with the segment’s sales rising by mid-single digits. The category was helped by the performance of the Pegasus 41, Pegasus Premium and Vomero 18.

Early seed pairs of the Vomero nearly sold out in North America from distribution to over 1,800 doors. There are plans in place to double distribution of the model by mid-April. As for iconic Nike footwear styles such as the Air Force I and Air Jordan I, the company plans to right-size their respective distributions going forward, not retire the styles. Classic footwear franchises as a percentage of Nike’s total mix are projected to fall by more than 10 points, with total units planned down by double digits in FY26.

EMEA and China

EMEA Ebit slipped by 35 percent year-over-year in Q3 to $480 million from $734 million, as the region’s total revenues contracted by 6 percent on a constant-currency basis to $2,811 million. Footwear sales were down by 7 percent at $1,742 million; apparel revenues were off by 4 percent at $913 million. Nike has begun working with JD Sports, Sports Direct and Snipes to elevate the brand’s product positioning and visual merchandising.

In China, the group says it remains committed to market and its 1.3 billion consumers who are connected to sport, fitness and sports lifestyle and is making new investments amid more intense market competition.

Greater China’s Ebit declined by 42 percent in Q3 to $421 million from $722 million on a 15 percent constant-currency contraction in quarterly sales to $1,733 million. Footwear and apparel sales were each down by 15 percent, to $1,282 million and $412 million respectively.