Q3 2025 Earnings Summary
- NIKE is re-embracing its wholesale partnerships, rebuilding strong relationships with wholesale partners, which is expected to drive future growth and profitability.
- NIKE has a strong innovation pipeline, with new products and technologies in both apparel and footwear, including the 24/7 collection and upcoming products showcased in the Spring '26 product review, which is expected to drive future growth.
- NIKE is making significant investments and taking aggressive actions in China, expecting to create energy with consumers and remains confident about the long-term opportunity in the Chinese market.
- Elevated inventory levels in classic footwear franchises are expected to pressure margins as Nike liquidates excess stock through value channels, a process that will take several quarters to complete.
- The company anticipates significant gross margin declines in Q4, with headwinds continuing into fiscal year '26 due to ongoing inventory liquidation and increased wholesale discounts, which may negatively impact profitability.
- Nike is facing challenges in Greater China due to aggressive competition and the time required to implement their strategies, signaling potential headwinds in this key growth market.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | –10.6% (from $12.61B to $11.27B) | Total revenue declined by 10.6% YoY due to widespread headwinds such as muted consumer demand, increased discounting, and proactive inventory management measures that continued trends from previous periods, reducing reported revenue levels. |
NIKE Brand Revenue | –8.8% (from $11.95B to $10.89B) | NIKE Brand revenue decreased by 8.8% YoY as lower product pricing, changes in channel mix, and softer demand across key product categories and regions (reflected in prior period trends) contributed to the decline. |
North America Revenue | –7.7% (from $5.28B to $4.86B) | North America revenue fell by 7.7% YoY driven by weaker consumer spending and strategic inventory reductions that affected wholesale and direct channels, echoing trends seen in earlier periods. |
EMEA Revenue | –14.6% (from $3.29B to $2.81B) | EMEA experienced a sharp 14.6% YoY decline largely due to lower unit sales, heavy discounting, and unfavorable pricing dynamics that intensified from previous periods, significantly impacting overall region performance. |
Greater China Revenue | –7.1% (from $1.86B to $1.73B) | Greater China revenue dropped by 7.1% YoY as softer demand and intensified discounting weighed on sales, following earlier signs of deceleration in the region. |
Asia Pacific & Latin America Revenue | –13.8% (from $1.71B to $1.47B) | APLA revenue declined by 13.8% YoY due to reduced wholesale and direct-to-consumer performance, lower unit sales, and shifts in regional market dynamics that continued from previous trends. |
Net Income | –47% (from $1,500M to $794M) | Net income fell by 47% YoY as the combined effect of declining revenues, gross margin compression from heavier discounting, and increased cost pressures significantly reduced profitability compared to the previous period. |
Diluted Earnings per Share (EPS) | –46% (from $1.00 to $0.54) | Diluted EPS dropped by 46% YoY reflecting the steep decrease in net income along with margin pressures from lower ASPs and continued cost challenges, which compounded the impact seen in past quarters. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q3 2025 | Expected to be down low double digits, reflecting initial steps on strategic actions and worsening foreign exchange headwinds, partially offset by a timing benefit from Cyber Week shifting into the third quarter. | no current guidance | no current guidance |
Gross Margins | Q3 2025 | Expected to decline by approximately 300 to 350 basis points, including restructuring charges during the same period in the prior year. This reflects actions to clean and reset the marketplace. | no current guidance | no current guidance |
SG&A (Selling, General and Administrative Expenses) | Q3 2025 | Expected to be slightly down year-over-year, including restructuring charges in the prior year. The company plans to tightly manage expenses while strategically increasing investment. | no current guidance | no current guidance |
Other Income and Expense | Q3 2025 | Expected to be in the range of $30 million to $40 million, including net interest income. | no current guidance | no current guidance |
Headwinds | Q3 2025 | A greater headwind is expected in Q4 2025 compared to Q3 2025 due to the timing of implementing strategic actions across different geographies and timelines. | no current guidance | no current guidance |
Revenue | Q4 2025 | no prior guidance | Expected to decline in the mid-teens range, albeit at the low end. This includes several points of unfavorable shipment timing in North America and 2 points of negative impact from foreign exchange headwinds. | no prior guidance |
Gross Margins | Q4 2025 | no prior guidance | Expected to decline by approximately 400 to 500 basis points, including restructuring charges during the same period last year. The impact of newly implemented tariffs on imports from China and Mexico was also included. | no prior guidance |
SG&A Expenses | Q4 2025 | no prior guidance | Expected to increase by low to mid-single digits, including restructuring charges from the prior year. Nike plans to tightly manage expenses while increasing investments in demand creation. | no prior guidance |
Other Income and Expense | Q4 2025 | no prior guidance | Expected to be between $45 million to $55 million for Q4. | no prior guidance |
Tax Rate | Q4 2025 | no prior guidance | The tax rate for the full fiscal year is expected to be in the mid-teens range. | no prior guidance |
Win Now Actions Impact | Q4 2025 | no prior guidance | Q4 is expected to reflect the largest impact from the Win Now actions, with headwinds to revenue and gross margin expected to moderate thereafter. | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q3 2025 | Expected to be down low double digits | 11,269(down ~9.3% from 12,429) | Beat |
Gross Margin | Q3 2025 | Expected to decline by 300 to 350 basis points yoy | 41.5% vs. 44.7% in Q3 2024 → ~320 bps decline | Met |
SG&A | Q3 2025 | Expected to be slightly down year-over-year | 3,887Vs. 4,226(↓ ~8% yoy) | Beat |
Other Income/Expense | Q3 2025 | Expected to be in the range of $30 million to $40 million | (38.00) | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Wholesale Partnerships | Rebuilding relationships, re-engaging neglected partners, and cleaning up the marketplace were emphasized in Q2 2025, Q1 2025, and Q4 2024 | Focus on an integrated, consumer-led marketplace with new leadership for both Direct and Wholesale channels; enhanced partner engagement and adjusted wholesale discounts | Consistent attention with a deeper integration and renewed leadership focus. |
Innovation and New Product Pipeline | Invested heavily in new innovations (e.g., Pegasus 41, Vomero 18, Spring ’26 review) and leveraging athlete insights were key points in Q2 2025, Q1 2025, and Q4 2024 | Continued strong momentum with new launches like the 24/7 collection, Pegasus Premium, and refreshed sportswear franchises driving consumer adoption | Sustained focus and an even more dynamic push toward product newness; sentiment remains optimistic and growth oriented. |
China/Greater China Market Dynamics and Competitive Landscape | Emphasized long-term growth potential and challenges such as promotional environments, soft traffic, and inventory issues in Q2 2025, Q1 2025, and Q4 2024 | Persistent challenges with a promotional marketplace, revenue declines due to soft traffic, but continued investments in localized innovations and competitive positioning | Ongoing strategic focus; while long‐term opportunity is affirmed, short-term challenges have intensified. |
Inventory Management and Classic Footwear Franchise Liquidation | Highlighted proactively managing elevated inventory levels and executing liquidation strategies for key franchises (Air Force 1, Dunk, Jordan 1) across Q2 2025, Q1 2025, and Q4 2024 | Continued aggressive actions to clean up excess stock and reduce classic franchise contributions, with coordinated efforts through factory stores and wholesale partners | Steady and proactive measures with an even sharper focus on liquidation to rebalance the portfolio. |
Gross Margin and Profitability Pressures | Addressed pressures from higher promotions and wholesale discounts with measured impacts in Q2 2025, Q1 2025, and Q4 2024 | Reported a significant decline (330 basis points) driven by increased markdowns and normalized wholesale discounts, with ongoing margin pressure expected in the near term | Worsened profitability challenges, highlighting an intensification of short-term pressures despite strategic pricing and cost benefits. |
Organizational Restructuring and Strategic Repositioning | Discussed leadership transitions, comeback plans, and portfolio adjustments in Q2 2025, Q1 2025, and Q4 2024 | Continued restructuring with additional integration between Direct and Wholesale channels, new leadership roles, and a focus on reestablishing a sports-centric culture | Consistent restructuring efforts that are evolving toward deeper operational integration and cultural renewal. |
Digital Channel Performance | Noted challenges in NIKE Digital performance, with varying declines and corrective actions across Q2 2025, Q1 2025, and Q4 2024 | NIKE Digital remains under pressure with significant revenue declines; strategic repositioning to a full-price model is underway to drive long-term sustainability | Persistent digital challenges continue, prompting a focused, albeit cautious, repositioning effort. |
Category-Specific Performance (Running and Basketball) | Running and Basketball showed robust growth driven by innovative product releases and community engagement in Q2 2025, Q1 2025, and Q4 2024 | Running continues to post healthy mid-single digit growth with new innovations and grassroots engagement; Basketball retains strong momentum with strategic launches and cultural events | Sustained strength in key performance categories, bolstered by new product introductions and active consumer engagement. |
Demand Forecasting and Order Book Trends | Emphasized improving demand sensing, balancing seasonal order books, and moderating revenue expectations in Q2 2025, Q1 2025, and Q4 2024 | Order books for performance categories are showing positive signs and full-price demand is improving, though inventory liquidation remains a concern | A gradual shift toward healthier demand signals, even as inventory challenges and cautious order book trends temper expectations. |
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Inventory Cleanup Timeline
Q: When will classic shoe inventories be cleaned up?
A: Nike expects to reduce the contribution of their classic franchises by 10 percentage points as a percent of overall footwear mix by the end of Q4 and continues to drive it down in fiscal year '26. They plan to use the first half of fiscal '26 to clean up the wholesale marketplace, with the largest impact on revenue and margin in Q4 and headwinds moderating thereafter. ** ** -
Margin Outlook Amid Liquidations
Q: Will gross margins improve as liquidations roll off?
A: Nike anticipates that gross margin headwinds from wholesale liquidations will moderate after Q4. While liquidations will continue into fiscal '26, they expect margins to gradually improve through the year as they progress and the stronger order book in the second half supports profitability. -
Performance vs. Classics Inflection
Q: When will performance growth offset Classics' declines?
A: Nike is gaining confidence in their product pipeline, expecting performance growth to begin offsetting declines in classic franchises starting in the Fall and Holiday seasons. The key to this inflection is quickly cleaning up the marketplace to make room for new innovations, aiming for a return to profitable, sustainable growth. -
Innovation Pipeline Confidence
Q: How robust is Nike's innovation pipeline?
A: Nike is confident in their innovation pipeline, both in long-term projects at the LeBron James Nike Sports Research Lab and near-term products across performance and sportswear. They are excited about upcoming products for Spring '26, focusing on running, basketball, football, training, and sportswear to drive newness and freshness. -
China Market Progress
Q: What's the progress on strategies in China?
A: Nike remains committed to China, viewing it as a long-term opportunity with 1.3 billion consumers. They've made significant investments but note that competition has become more aggressive. They're accelerating efforts to clean up the promotional marketplace and are confident in their actions to drive growth, though it will take time to execute the 'Win Now' strategy in this monobrand market. -
Wholesale Channel Learnings
Q: What are the learnings from returning to wholesale?
A: Nike realized they were working too siloed between direct and wholesale channels and are now pushing for an integrated, consumer-led marketplace approach. They've re-engaged closely with wholesale partners, aligning on growth plans and elevating brand presentation, believing this integration is key to mutual profitability and brand strength. -
Balancing Promotions and New Products
Q: How will you balance clearing inventory and new product excitement?
A: Nike is rapidly moving both digital and physical retail to full-price presentations, using value channels to liquidate excess inventory and make room for new innovations. They're resetting categories like running with new products and focusing on compelling storytelling to drive sell-through while maintaining brand integrity. -
Overhead vs. Demand Creation Expenses
Q: Thoughts on overhead versus demand creation spending?
A: Nike is managing operating overhead tightly, achieving a 3% decline excluding prior year impacts, while increasing demand creation expenses by 8% this quarter to elevate storytelling and marketing impact. They aim to invest strategically in sales organizations and product innovation while maintaining expense discipline to return to growth.
Research analysts covering NIKE.