Nike stock tumbled roughly 14% on Wednesday morning following modest third-quarter results, as investors digested a turnaround that analysts say is working but will take longer than expected.
The company posted fiscal third-quarter revenues of $11.3 billion, slightly higher than analyst estimates of $11.23 billion, but lower than the $12.4 billion Nike reported in the fiscal second quarter. The quarter included a workforce reduction of about 775 employees as Nike automates key processes, alongside a 3% increase in North American sales but a 10% decrease in sales in China and a 35% dip for Converse.
Nike’s modest earnings come after its stock had jumped in February following the U.S. Supreme Court’s ruling that struck down President Donald Trump’s tariff policies.
In December, Nike CEO Elliott Hill said the company was in the “middle innings” of its comeback. During Tuesday’s earnings call, he said its “comeback is within reach.”
“The work is not finished, but the direction is clear, our teams are moving with focus and urgency, and our foundation is getting even stronger to build the future of Nike,” Hill said in Tuesday’s press release.
Analysts agreed there are clear signs of operational progress, while noting the lengthening timeline and significant near-term headwinds like inventory cleanup efforts, continued weakness in China, tariff-driven margin pressure, and soft direct-to-consumer demand.
Truist said Nike’s results were slightly ahead of expectations but noted “turnaround progress remains choppy” and “pressure” will likely “persist” through this year.
“We expect shares to remain in the penalty box over the next few months but believe with the bar now reset materially lower, further marketplace cleanup efforts being undertaken, and newness continuing to scale, the team should have a clean slate and meaningful upside opps to discuss at their Fall analyst day,” Truist said.
Analysts at JPMorgan struck a more cautious tone, lowering estimates across the board and pushing out the timeline for meaningful recovery—the bank said margins “are expected to improve starting in fiscal 2027,” and “a return to a more normalized profitability profile may not come until 2029.”
Telsey Group analysts said the fiscal third-quarter results beat expectations “by a narrow margin,” and highlighted that Nike says it will need to be more aggressive with markdowns on existing inventory.
“Overall, Nike is making the right moves by cleaning up inventory, rebalancing the product portfolio by increasing newness and reducing the focus on classic franchises, and strengthening relationships with wholesale partners,” Telsey said. “However, the turnaround is progressing at a slow pace and there remains significant work to revitalize the entire product portfolio and right size its international businesses.”
