Nike (NKE) beat modest expectations as it continues to battle headwinds under new CEO Elliott Hill.
The footwear giant posted its fiscal third quarter earnings on Thursday after market close. Its revenue of $11.27 billion surpassed estimates of $11.03 billion, though it’s still a drop compared to the $12.43 billion from a year ago.
Adjusted earnings per share came in at $0.54 compared to estimates of $0.30, but also under last year’s $0.98.
The earnings report is the second under Hill, a company veteran who took the helm on Oct. 14. Shares jumped 2% in after-hours trading.
“The progress we made against the ‘Win Now’ strategic priorities we committed to 90 days ago reinforces my confidence that we are on the right path,” Hill said in the release. “What’s encouraging is NIKE made an impact this quarter leading with sport.”
“Nike is getting back to being Nike again,” Jefferies analyst Randal Konik wrote in a note following the earnings.
The road ahead will not be easy. Competitors like On Holding (ONON), Skechers (SKX), and Hoka (DECK) sneakers have taken market share in recent years. An avalanche of tariff news has reignited inflation fears and shaken consumer confidence, which dropped sharply in February.
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Here’s what Nike posted in the fiscal third quarter versus Bloomberg consensus estimates:
- Adjusted earnings per share: $0.54 versus $0.30
- Revenue: $11.27 billion compared to $11.03 billion
- Nike brand revenue: $10.89 billion compared to $10.6 billion
CFRA analyst Zachary Warring said Hill can revive the company, but investors likely won’t see the same growth from 10 to 15 years ago given its sheer size at a $108 billion market cap. That’s compared to roughly $43 billion for Adidas, $18 billion for Hoka owner Deckers, and $8.4 billion for Skechers.
“I’ve spoken to a lot of industry contacts who all tell me that Elliot’s the real deal. He’s the right person to turn the ship around,” said Needham & Company analyst Tom Nikic, who has a Buy rating on shares.
Part of the key will be a refocus on core sports offerings. “They’ve gotten too far off-field, off-court, outside the gym, footwear and apparel,” Nikic said.
Other corrections Hill needs to make include managing inventory to make iconic brands like Jordan and Nike Dunks “scarce and hard to get” again, after making them “very easy to get,” Nikic said.
In the previous quarter, CFO Matthew Friend said the company plans to reduce excess inventory to make room for seasonal and new products for fall and holiday 2025.
Nike Digital will turn toward a full-price model with less promotional activity, per Friend. Nike’s gross margins declined to 41.5% in the quarter, missing estimates of 43%.
Another major initiative is rebuilding partnerships with retailers like JD Sports (JDSPY), Dick’s Sporting Goods (DKS), and Foot Locker (FL) after Nike went all in on direct-to-consumer.
“A lot of people who, when they walked into a Foot Locker … they didn’t find what they were looking for from Nike [and] said, ‘Okay, well, as long as I’m here … I’m going to buy a pair of Adidas or I’m going to buy a pair of New Balance, I’m going to buy a pair of Hokas,'” Nikic said.
In its second quarter earnings call, Hill said Nike planned to invest in its partners and its sales team would “have to earn every open-to-buy dollar,” with plans to provide marketing support.
A bright spot is the retailer’s proactiveness in diversifying its manufacturing base since the first Trump administration. In 2016, it produced 26% and 29% of its apparel and footwear in China, respectively. compared to 18% and 16% in 2024.
Its large foreign markets are also not subject to US tariffs.
“Nike does about 60% of their revenue outside of the US, so that portion of their revenue is not affected by tariffs at all. They sell in Europe, the stuff they sell in Asia, the stuff they sell in Latin America,” Nikic said.
However, certain Nike shoes and products, which it does not disclose, are only made in China. It “can’t get around all of the tariffs,” said Warring, but it can choose to send fewer Chinese-made products to the US.
Warring said Adidas manufactures about 16% of its products in China and the figure for Skechers (SKX) is higher, though it has not disclosed specific breakdowns.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at [email protected].
