TLDR
- Nike reported a 9% decline in Q3 fiscal 2025 revenue to $11.26 billion
- Net income fell 32% to $794 million with EPS dropping from $0.77 to $0.54
- New CEO Elliott Hill faces challenges from competitors and upcoming Trump tariffs
- Q4 revenue expected to decline in “mid-teens range” due to tariff impacts
- Nike partnered with Kim Kardashian’s SKIMS brand to launch NikeSKIMS activewear
Nike, the global sportswear leader, reported disappointing financial results for the third quarter of fiscal 2025. The company saw its total revenue decline by 9% to $11.26 billion compared to $12.42 billion in the same period last year.
The earnings report, which covered the period ending February 28, showed Nike Brand revenue also fell by 9% across all regions. This marks the second earnings report under new CEO Elliott Hill, who took over on October 14.
Nike Direct experienced an even steeper decline of 12%. This was primarily due to a 15% drop in Nike brand digital sales and a 2% decrease in revenue from Nike-owned stores.
The company’s wholesale figures weren’t spared either, posting a 7% decline during the quarter. One of Nike’s subsidiaries saw an 18% revenue drop, totaling $405 million.
Financial Impact
Net income took a substantial hit, falling 32% to $794 million compared to $1.17 million in the same period last year. This downturn was reflected in diluted earnings per share, which decreased by 30% from $0.77 to $0.54 year-on-year.
Despite the overall decline, Nike’s adjusted earnings per share of $0.54 surpassed modest analyst estimates of $0.30. Revenue also beat expectations of $11.03 billion, though it still represented a notable drop from the previous year.
Gross profit followed the downward trend, registering a 16% drop to $4.67 billion. The company’s gross margin contracted by 330 basis points to 41.5%, missing analyst estimates of 43%.
Several factors contributed to the margin contraction. These included increased discounting activity, higher reserves for inventory obsolescence, rising product costs, and shifts in the channel mix.
The company did manage to trim its selling and administrative expenses by 8% to $3.88 billion. Inventories were also down by 2% to $7.5 billion over the quarter.
Looking Ahead
The market reaction was negative, with Nike stock falling 7% in premarket trading on Friday. Investors seemed particularly concerned about the outlook for the fourth quarter.
CFO Matthew Friend warned of the impact of Trump’s tariffs, including a 20% duty on all goods from China.
“We expect fourth quarter gross margins to be down approximately 400 to 500 basis points, including restructuring charges during the same period last year,” Friend said on the earnings call.
Friend explained that the company has included the estimated impact from newly implemented tariffs on imports from China and Mexico in their guidance. Q4 revenue is expected to be “down in the mid-teens range, albeit at the low end.”
The company is facing several external challenges.
Friend noted they are “navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile for rates and tax regulations.”
These external factors are also impacting consumer confidence, which dropped sharply in February. This could further hurt Nike’s sales in the coming months.
Nike is also facing increased competition. In recent years, competitors’ sneakers from On, Skechers, and Hoka have taken market share from the once-dominant brand.
Despite these challenges, CEO Elliott Hill remains optimistic. “The progress we made against the ‘Win Now’ strategic priorities we committed to 90 days ago reinforces my confidence that we are on the right path,” Hill stated.
Hill added, “What’s encouraging is NIKE made an impact this quarter leading with sport – through athlete storytelling, performance products and big sport moments.”
On a positive note, Nike announced a new partnership in February 2025. The company teamed up with American media personality Kim Kardashian’s shapewear brand SKIMS to create NikeSKIMS, a new brand aimed at disrupting the global activewear market with bold innovation for women athletes.
“We’ve been through a lot of change, but what’s encouraging is that in the 150 days since I’ve been back, we’ve reclaimed our identity. We know who we are. Nike, Inc. is a sports company,” Hill emphasized on the earnings call.
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