Nike (NKE) reported disappointing fiscal third-quarter results, leading to a 9% drop in after-hours trading, as the stock hovers near an eight-year low. Revenue was flat at $11.28 billion, slightly above expectations, but gross margin fell 130 basis points to 40.2%, primarily due to North American tariffs. Operating income declined 23% to $635 million, and earnings per share dropped 35% to $0.35, despite beating consensus estimates. The company’s turnaround appears slower than anticipated, with management forecasting a continued revenue decline of 2%-4% into the fourth quarter.
While the results highlighted weaknesses in key categories, there were some bright spots, particularly in running, which saw a revenue increase of over 20%. However, concerns about Nike’s market share erosion to emerging brands persist, especially as it struggles in China. Investors should monitor the company’s guidance for gross margin recovery by Q2 2027; a failure to meet this target may raise further doubts about the turnaround strategy.
Source: fool.com