NIKE, Inc. (NKE) Q3 2025 Earnings Summary

Executive Summary

Q3 FY2025 revenue of $11.27B (-9% YoY; -7% FXN) and diluted EPS of $0.54; top line slightly above S&P Global consensus while EPS sharply beat, aided by a 5.9% effective tax rate from a one-time deferred tax benefit . EPS beat vs. consensus $0.29; revenue beat vs. consensus $11.03B (see Estimates Context).*
Gross margin contracted 330 bps to 41.5% on higher discounts, inventory obsolescence, higher product costs and channel mix; SG&A -8% as operating overhead fell, partly offset by higher demand creation .
Management reiterated the “Win Now” priorities and guided Q4 as the trough: revenue down mid-teens (low end), GM down ~400–500 bps, SG&A up low–mid single digits; OI&E $45–$55M; FY tax rate mid-teens .
Strategic push to clean up classics (Air Force 1, Dunk, AJ1) and reset Digital to full-price intensified; running and training show improving momentum; Greater China remains promotional as cleanup actions deepen .
Potential stock reaction catalysts: magnitude/duration of Q4 trough, pace of inventory normalization and classics mix-down, evidence of full-price Digital stabilization, and early read-throughs from product resets (Pegasus Premium, Vomero 18) .

What Went Well and What Went Wrong

What Went Well
- Performance-led categories showed momentum: running grew mid-single digits; successful seeding of Pegasus Premium and launch of Vomero 18 with strong early response and planned scale into FY26 .
- Demand creation stepped up around major sport moments (Super Bowl, NBA All-Star), with CEO emphasizing “lead with sport” narrative; NA Digital promo days cut from >30 to zero in Jan–Feb to restore brand premium .
- SG&A -8% as operating overhead declined; EBIT discipline despite revenue pressure; emphasis on rebuilding wholesale partnerships and order books showing performance/newness offsetting classics declines in some geos .
What Went Wrong
- Revenue -9% YoY with GM -330 bps to 41.5% on markdowns, wholesale discounts, obsolescence and higher product costs; NIKE Digital -15% and Direct -12%, reflecting pullback on promotions and classics reset .
- Greater China remained a headwind: traffic down double digits, high promotions, EBIT -42%; aggressive cleanup actions pressured revenue and margins .
- Mix of classics (AF1, Dunk, AJ1) remains too high; management accelerating mix-down (down >10 pts of footwear mix by FQ4) which will remain a headwind into FY26 .

Financial Results

Metric	Q1 FY2025 (Aug 31, 2024)	Q2 FY2025 (Nov 30, 2024)	Q3 FY2025 (Feb 28, 2025)
Revenues ($USD Billions)	$11.59	$12.35	$11.27
Gross Margin (%)	45.4%	43.6%	41.5%
EBIT Margin (%)	10.9%	11.3%	7.3%
Diluted EPS ($)	$0.70	$0.78	$0.54
NIKE Direct Revenues ($B)	$4.7	$5.0	$4.7
Wholesale Revenues ($B)	$6.4	$6.9	$6.2
YoY Revenue Change	-10%	-8%	-9%
YoY Gross Margin Change (bps)	+120 bps	-100 bps	-330 bps

Segment/Geography Breakdown (Q3 FY2025 vs. Q3 FY2024)

Segment	Q3 FY2025 Revenues ($USD Millions)	YoY % (Reported)
North America Total	$4,864	-4%
EMEA Total	$2,811	-10%
Greater China Total	$1,733	-17%
APLA Total	$1,470	-11%
Converse	$405	-18%

KPIs and Balance Sheet

KPI	Q1 FY2025	Q2 FY2025	Q3 FY2025
NIKE Digital YoY	-20%	-21%	-15%
NIKE-owned Stores YoY	+1%	-2%	-2%
Effective Tax Rate	19.6%	17.9%	5.9%
Inventories ($B)	$8.25	$7.98	$7.54
Cash & ST Investments ($B)	$10.3	$9.8	$10.4
Share Repurchases ($B)	$1.2	$1.1	$0.50
Dividends ($M)	$558	$557	$594

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q3 FY2025	Down low double digits	N/A (actual reported)	N/A
Gross Margin	Q3 FY2025	Down ~300–350 bps (incl. prior-year restructuring comp)	N/A (actual reported)	N/A
SG&A	Q3 FY2025	Slightly down YoY	N/A (actual reported)	N/A
OI&E	Q3 FY2025	$30–$40M	N/A (actual reported)	N/A
Revenue	Q4 FY2025	N/A	Down mid-teens (low end)	New
Gross Margin	Q4 FY2025	N/A	Down ~400–500 bps; includes new tariffs on China/Mexico imports	New
SG&A	Q4 FY2025	N/A	Up low–mid single digits (incl. prior-year restructuring comp)	New
OI&E	Q4 FY2025	N/A	$45–$55M	New
Effective Tax Rate	FY2025	N/A	Mid-teens for full year	New
Dividend	Next Payment	N/A	$0.40/share payable Apr 1, 2025	Confirmed

Management reiterated 2H plan consistent with prior quarter, with shifts between Q3 and Q4 and the largest impact in Q4 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY2025, Q2 FY2025)	Current Period (Q3 FY2025)	Trend
Product innovation/performance focus	Fields-of-play structure; running pipeline; newness up strong double digits	Running grew mid-single digits; Peg Premium/Vomero 18 strong early response; scaling in FY26	Accelerating
Digital & promotions	Elevated promotions; Digital -20% ; plan to reposition to full price	Reduced promo days to zero in NA Jan–Feb; lower markdown rates; shift closeouts to factory stores	Improving quality of sales
Classics cleanup	Plan to reduce reliance; headwind mid-single-digit to revenue	Classics mix down >10 pts by Q4; further reductions into FY26	Intensifying cleanup
Wholesale partnerships	Re-engagement and elevation in-store (DICK’S, Foot Locker pilots)	Deeper partner coordination; returning product; investing in commercial terms to historical levels	Rebuilding
Greater China	Soft traffic; promotional environment	Aggressive cleanup (returns, rebates, liquidation); EBIT -42%	Still challenged
Tariffs/macro	Port strike risk noted	New tariffs included in Q4 GM guide; FX headwinds; geopolitical uncertainty	External headwinds rising
Women’s/wellness	NA running & women’s fitness concepts in pilots	Nike Scales/24-7 apparel momentum; NikeSKIMS partnership announced (launch in Spring)	Broadening women’s offense

Management Commentary

CEO Elliott Hill: “When we lead with sport, we create impact for NIKE… We call these strategic priorities Win Now.”
CFO Matt Friend on Q4/outlook: “We expect Q4 revenues to be down in the mid-teens… Q4 gross margins to be down approximately 400 to 500 basis points… other income and expense… $45–$55 million… tax rate for the full year… mid-teens.”
On classics reset and mix: “By the time we exit Q4, we expect that we will have reduced the contribution of those franchises by 10 percentage points… and we intend to drive that down more in fiscal ’26.”
On Digital reset: “We’re reducing promotional days… shifting closeout liquidation to our NIKE factory stores… we expect digital traffic to be down double digits in fiscal ’26.”

Q&A Highlights

Inventory/classics cleanup timeline: CEO/CFO outlined accelerated actions; Digital inventory redirected to factory stores; wholesale cleanup expected to continue through 1H FY26; classics contribution down >10 pts by Q4 .
Innovation pipeline strength: CEO cited confidence across long-term NSRL work and near-term performance/lifestyle (24/7 apparel, Vomero 5, P6000, Shox; Spring ’26 preview well received) .
Promotions vs. brand protection: Plan to protect full-price presentation in owned and partner channels, using value factory stores to clear excess; running reset (Peg Premium, Vomero 18) as template .
Wholesale profitability/terms: Investing in commercial terms back to historical levels to enable mutually profitable businesses and elevate brand presentation at retail .
Geography read-through: NA/EMEA/APLA progressing on performance/newness; China remains promotional with aggressive cleanup to create space for innovation; long-term opportunity intact .

Estimates Context

Metric (Q3 FY2025)	S&P Global Consensus	Actual
Revenue ($USD Billions)	$11.03B*	$11.27B
Diluted EPS ($)	$0.29*	$0.54
Gross Margin (%)	41.73%*	41.5%
Revenue – # of Estimates	25*	—
EPS – # of Estimates	23*	—

Values retrieved from S&P Global.
Interpretation: Small top-line beat and a large EPS beat, though EPS benefited from a 5.9% tax rate driven by a one-time deferred tax benefit; gross margin slightly below consensus as cleanup actions weighed .

Key Takeaways for Investors

Q4 is guided as the trough with the largest impact from cleanup/tariffs/FX; assess downside risk to revenue and margin and timing of moderation into FY26 .
EPS beat was quality-mixed: aided by unusually low tax rate; core profitability under pressure from markdowns/discounts/channel mix; watch GM/EBIT margin recovery cadence .
Strategy pivot is clear: accelerate performance/newness, aggressively rightsizing classics, and reset Digital to full-price; track classics mix down and Digital full-price realization (promo days, markdown rates) .
Monitor product adoption and scale (Pegasus Premium, Vomero 18) and running/training order books to offset classics declines; partner feedback and futures are early indicators .
Greater China remains the biggest execution/macro risk; cleanup is weighing on both revenue and gross margin near term; look for signs of traffic stabilization and full-price sell-through .
Wholesale normalization (terms back to historical, presentation investment) is central to recovery; watch partner sell-through, returns, and growth in performance assortments .
Cash returns remain intact (dividend $0.40, ongoing buybacks) while inventory trends improved; balance sheet supports transition, but near-term P&L headwinds persist .

Other Relevant Press Releases (Q3 FY2025)

Dividend declaration: $0.40 per share payable Apr 1, 2025 .
NikeSKIMS partnership: long-term partnership with SKIMS to launch NikeSKIMS, debuting first collection in Spring (US), global rollout 2026, expanding women’s/fashion-led performance offering .

Footnotes:
*Estimates marked with an asterisk are values retrieved from S&P Global.