Published by Global Banking & Finance Review®
Posted on March 31, 2026
3 min readLast updated: March 31, 2026
Add as preferred source on GoogleNike’s Q3 results surprised to the upside, with flat revenue at $11.28 billion beating estimates and EPS of $0.35 topping forecasts. Wholesale bounced back while DTC slumped, margins stayed under pressure, and China remained a drag.
By Savyata Mishra and Nicholas P. Brown
March 31 (Reuters) - Nike's forecast of a surprise drop in fourth-quarter sales on Tuesday sent its shares down more than 9% in extended trading, as persistent weakness in China and slow progress in clearing older inventory hamper turnaround efforts.
Under CEO Elliott Hill, Nike has pulled back promotions, stepped up product innovation and refocused on core franchises like running, as it tries to reset the business after years of excess inventory and uneven demand across North America and China.
But those efforts have yet to bear fruit as CFO Matt Friend projected a 2% to 4% drop in current-quarter sales, compared with Wall Street estimates of a 1.9% rise, according to data compiled by LSEG.
In China, where operational missteps have collided with fierce domestic competition, Nike's sales fell 10%. They are expected to fall 20% in the fourth quarter, Friend said on a post-earnings call with analysts, citing volatility from rising oil prices and ongoing fighting in the Middle East.
The company has struggled in its second-largest market, which accounts for 15% of annual sales, due to weaker product assortments, while slower innovation has led to share losses to local competitors Anta and Li Ning.
Friend also said Nike expects to end the fourth quarter with excess inventory.
REVENUE COMES IN FLAT
The sportswear retailer's revenue was flat at $11.28 billion in the third quarter ended February 28, but came in above analysts' average estimate of a 0.3% drop to $11.24 billion, according to data compiled by LSEG.
CEO Hill said on the earnings call that "the work is not finished," adding that his team is "moving with focus and urgency."
Bright spots in an uneven quarter included wholesale revenue, which jumped 5% to $6.5 billion, helped by stable sales in North America. Direct-to-customer sales, though, fell 4%, dragged by muted demand in Europe and China.
Nike earned 35 cents per share in the quarter, beating estimates of 28 cents.
"For what it's worth, the U.S. has been the area Nike has been performing best in our visibility and, as such, a dent to American consumer confidence would blunt Nike's recovery efforts," said Drake MacFarlane, analyst at M Science.
The company's gross profit margin contracted for a sixth straight quarter, falling 130 basis points to 40.2%, mainly due to tariffs.
Hill, a longtime Nike veteran, has been given a long leash by investors, who have lauded his efforts to return the company to its sports-centered roots.
But as Hill admitted on Tuesday's call that Nike's turnaround is taking longer than expected, "the weak stock price suggests that a lot of investors have already lost confidence" in him, Morningstar analyst David Swartz said.
(Reporting by Savyata Mishra in Bengaluru; Editing by Anil D'Silva)
Nike beat third-quarter earnings estimates, with revenue of $11.28 billion and earnings of 35 cents per share.
Progress in wholesale business was offset by weakness in China, margin pressure, and falling direct-to-customer sales.
Nike's sales in China fell 7% in the reported quarter, while North America showed more stability.
Nike's gross profit margin fell for the sixth straight quarter, mainly due to tariffs.
Nike shares were down 3% after the report and have lost about 17% of their value over the last 12 months.
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