- Nike Inc. (NKE) shares fell over 7% to $66.63 in pre-market trading on Friday after reporting a 9.1% revenue drop to $11.27 billion and a 330 basis point gross margin decline to 41.5% in Q3 (Feb), despite beating earnings estimates with $0.54 per share against a $0.30 consensus.
- Revenue declines hit NIKE Direct at 12% to $4.7 billion and wholesale at 7% to $6.2 billion, with North America down 4% to $4.86 billion and Greater China down 15% currency-neutral to $1.73 billion, reflecting Nike’s worst footwear revenue in over a decade.
- CEO Elliott Hill highlighted progress in the “Win Now” strategy, focusing on sport and product innovation, as the company manages $7.5 billion in inventory (down 2% y/y).
Nike Inc. (NKE) is grappling with a challenging landscape as its shares slide over 7% to $66.63 in pre-market trading on Friday, reflecting investor unease following a troubling Q3 performance. The sportswear giant reported revenues of $11.27 billion, a 9.1% drop year-over-year, yet still surpassing the $11.02 billion consensus, while earnings of $0.54 per share beat expectations of $0.30 by $0.24. Despite these beats, the company’s gross margin shrank by 330 basis points to 41.5%, signaling pressure on profitability amid a broader strategy to liquidate inventory, which stood at $7.5 billion—down 2% from last year due to product mix shifts but up in unit volume.
The downturn is stark across key revenue streams, with NIKE Direct revenues falling 12% to $4.7 billion (10% on a currency-neutral basis) and wholesale revenues declining 7% to $6.2 billion (4% currency-neutral), painting a picture of weakened consumer demand. Regionally, North America saw a 4% revenue drop to $4.86 billion, while Greater China faced a steeper 15% decline on a currency-neutral basis to $1.73 billion, highlighting uneven global performance. These figures underscore Nike’s struggle with its worst footwear revenue in over a decade, a grim milestone that has prompted aggressive inventory management and a focus on clearing excess stock, a move that could further strain margins as competition intensifies.
Elliott Hill, President and CEO, remains optimistic, pointing to progress in the “Win Now” strategic priorities set 90 days ago, emphasizing storytelling, performance products, and sport-centric marketing as bright spots in the quarter. With inventories down slightly and Q4 revenues expected to be down in the low end of the mid-teens range, Nike is betting on these initiatives to stabilize its trajectory. The company’s ability to pivot effectively will be critical, especially as it navigates a softening market and aims to reclaim momentum in an industry where innovation and consumer loyalty are paramount. Investors, however, appear unconvinced for now, with the pre-market drop from Thursday’s $71.86 close signaling skepticism about near-term recovery.
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