Nike warned investors on Thursday that its sales will decline by a double-digit percentage in its current quarter, as the company struggles with new tariffs, weak consumer confidence, and a slower-than-expected turnaround.
During a call with analysts, CFO Matt Friend projected a sales decline at the “low end” of the mid-teens range for the fiscal fourth quarter ending in May. The sneaker giant also expects its gross margin to drop between four and five percentage points as it continues liquidating excess inventory.
“We believe that the fourth quarter will reflect the largest impact from our actions, and that the headwinds to revenue and gross margin will begin to moderate from there,” Friend said. He cited geopolitical uncertainty, fluctuating foreign exchange rates, and new tariffs as key challenges.
The outlook fell short of analyst expectations, triggering a more than 4% drop in Nike’s stock in extended trading. The company has also struggled in China, where sales fell 17% in the most recent quarter to $1.73 billion. CEO Elliott Hill, who returned to Nike last year, acknowledged intensifying competition in the region.
Despite the gloomy forecast, Nike beat Wall Street’s earnings expectations for its fiscal third quarter, reporting earnings per share of 54 cents on revenue of $11.27 billion. However, profits were down 32% from a year ago.
Nike’s turnaround efforts focus on product innovation, wholesale partnerships, and regaining lost market share. The company has seen promising early results with new models like the Pegasus Premium and is set to expand its women’s apparel business through a partnership with Kim Kardashian’s Skims brand.
With new tariffs and soft consumer spending creating additional hurdles, analysts say Nike’s path to recovery may take longer than anticipated.
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