The US sporting goods provider Nike Inc. presented its results for the third quarter of the 2025/26 financial year on Tuesday. At the same time, the group announced a strategic realignment.
In the most recent quarter, which ended February 28, sales reached $11.3 billion (9.7 billion euros). This means that it remained almost unchanged compared to the same period last year. On a currency-adjusted basis, sales fell by three percent.
Sales are increasing in the wholesale business
While overall sales stagnated, there was a shift in channel dynamics. Wholesale sales rose by five percent (+1 percent at constant currency) to $6.50 billion. Nike owed this growth primarily to strong demand in North America.
However, sales in its own retail sector fell by four percent to $4.50 billion. In the digital business, sales fell by nine percent, while in the company’s own stores the decline was five percent.
Sales of the Nike brand grew by one percent to eleven billion US dollars, although after adjusting for currency effects they fell by two percent. Growth in North America was offset by declines in Greater China and the EMEA region, which includes Europe, the Middle East and Africa. The Converse brand suffered a 35 percent decline in sales to $264 million.
Margin pressure and tariff effects are weighing on earnings
The group’s gross margin fell by 130 basis points to 40.2 percent. This is largely attributed to increased tariffs in North America. Chief Financial Officer (CFO) Matthew Friend said higher tariffs are expected to weigh on gross margin through the first quarter of fiscal 2027. Net profit for the third quarter fell 35 percent to $520 million (449 million euros).
The group is currently continuing its “Win Now” strategy. This is a series of corrective measures to improve market health. CEO Elliott Hill said the company is consciously eliminating “unhealthy inventory” of classic shoe franchises. He estimated the negative impact of this targeted reduction in the past quarter at five percentage points. However, the measure is necessary for long-term brand value.
Company leadership emphasized that the current decline in the Nike Sportswear and Jordan Streetwear segments is a byproduct of prioritizing the performance category. Hill explained that the company initially focused on running and football to restore brand authenticity.
“Ultimately, it’s sports that creates a ‘halo’ effect across the sportswear and streetwear categories,” Hill explained. Nike will now move “from defense to offense” in its lifestyle segments, he emphasized.
Nike announces a strategic turnaround
The group also declared that it would move away from a “direct-first” strategy. Instead, he will rely on a “city-led” approach in the future. This is particularly relevant in EMEA and China, where the brand wants to become more “locally relevant”. In China, the company is pushing ahead with the implementation of plans in digital and stationary retail in order to overcome structural challenges.
For the fourth quarter, management forecast a decline in sales of two and four percent. That fell well short of Wall Street’s expectations. Analysts had previously expected growth of 1.9 percent.
For the rest of the calendar year, the company expects a decline in sales in the low single-digit range. The moderate growth in North America is therefore unlikely to be able to compensate for the ongoing sales losses in China.
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