Finance
Nike forecasts fourth-quarter revenue below estimates, shares drop
Published by Global Banking & Finance Review®
Posted on March 20, 2025
4 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 20, 2025
4 min readLast updated: January 24, 2026
Nike forecasts a larger revenue drop than expected, causing shares to fall. New CEO Elliott Hill's 'Win Now' strategy aims to boost sales.
By Ananya Mariam Rajesh and Nicholas P. Brown
(Reuters) -Nike on Thursday forecast a steeper drop in fourth-quarter revenue than analysts had expected, striking a cautious tone as it works to rekindle interest among consumers who have defected to trendier rivals.
Shares of the leading shoe and apparel brand dropped in after-hours trade following Nike's third-quarter earnings call, in which Chief Financial Officer Matthew Friend said he expects fourth-quarter revenue to decline in the mid-teens percentage range. That would exceed analyst expectations for a 12.22% decline to $11.07 billion, according to data compiled by LSEG.
Earlier, Nike reported third-quarter results that beat expectations on a promising consumer response to new shoe launches like the Pegasus Pro and Vomero 18. Revenue in China, though, was down 17%, which worried investors.
Shares of the Air Jordan maker rose immediately following the earnings report but then reversed course after the forecast, falling nearly 5% from $71.86 at the close.
The newly launched sneakers, fast-tracked by new CEO Elliott Hill, have performed well enough to give Nike some breathing room after several quarters of weak demand.
But next quarter may look bleak, Friend said, as the company discounts old items in an effort to clear old inventory, and continues to rebuild relationships with retailers. Revenues "will begin to moderate" after the fourth quarter, Friend said.
Overall revenues were down 9% to $11.27 billion, with diluted earnings per share falling 30% to 54 cents. The results beat Wall Street expectations of an 11.5% revenue drop to $11.01 billion, and a 62.2% dive in earnings per share, according to data compiled by LSEG.
China remained a particular drag. Demand in the region suffers from concerns over job and wage security and a prolonged property slump.
"Sport is growing in China and we must accelerate our pace” there, Friend said on the call.
Morningstar analyst David Swartz said that while overall results beat Wall Street expectations, "There's no way to ignore [China], and sales in Europe are not looking so great either."
'WIN NOW'
Hill took the helm in October to lead a turnaround at a company that has lately struggled to design new, innovative shoes.
With rivals On and Hoka retaining their freshness in the eyes of consumers, analysts and investors heading into the quarter had anticipated that Nike's turnaround will take a few more quarters.
In the call, Hill outlined what he called Nike's "Win Now" strategy, a five-pillared plan that includes building out a broad swath of new shoe products and boosting its ground game in five key cities: Shanghai, Beijing, Los Angeles, New York and London.
In five months on the job, he has stressed the need to turn Nike's focus back to its core business of sport and to repair its relationships with retailers, which suffered when ex-CEO John Donahoe shifted the company's focus to direct-to-consumer sales.
The quarter was marked by a boost in marketing and advertising efforts, the area "we knew could move quickest" to connect with consumers, Hill said on the call.
This year Nike ran its first Super Bowl ad in 27 years, featuring female stars like Caitlin Clark who has turbo-charged the popularity of the Women's National Basketball Association.
"I think the potential positive surprise here is that ... the new product is hitting the mark and that bodes well for the future launches," said Ramiz Chelat, portfolio manager at Vontobel, an investor in Nike.
Still, revenues remain pressured by discounts on legacy franchises like Air Jordan 1, Air Force 1 and Dunk. That might go on for a while, Friend said.
"We expect that’s going to take us several quarters to work though," he said.
Gross margin fell 330 basis points to 41.5%, with Nike primarily attributing it to higher discounts, an excess of outdated inventory and increased product costs.
(Reporting by Ananya Mariam Rajesh in Bengaluru and Nicholas P. Brown in New York; Editing by Pooja Desai and David Gregorio)
The article discusses Nike's forecasted revenue decline and its impact on share prices.
Nike's shares dropped nearly 5% following the revenue forecast.
CEO Elliott Hill is implementing the 'Win Now' strategy to boost sales and improve market position.
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