Nike Warns of Double-Digit Sales Drop

Global sportswear brand Nike is bracing for a challenging fourth quarter, projecting a sales drop in the mid-teens percentage range, far worse than Wall Street’s forecast of an 11.4% decline. 

The sports apparel giant also expects its gross margin to shrink by 4-5 percentage points as it aggressively clears outdated inventory—a strategy likely to stretch into fiscal 2026.

This cautious outlook reflects intensifying external pressures, including a fresh 20% tariff imposed on imports from China, where roughly 24% of Nike’s suppliers come from. 

These tariffs, combined with fluctuating foreign exchange rates and waning consumer confidence, particularly in discretionary spending, are creating significant challenges.

Nike’s recent financial results prove these challenges. Third-quarter net income fell sharply by 32%, reaching $794 million compared to $1.17 billion last year, even though earnings per share surpassed analyst expectations at 54 cents versus the 29-cent estimate. 

Revenue dropped about 9% year-over-year to $11.27 billion, slightly beating the forecast of $11.01 billion. Sales in North America, Nike’s largest market, dropped by 4% to $4.86 billion, yet managed to exceed analysts’ expectations of $4.53 billion.

China posed notable problems, with regional sales diving 17% to $1.73 billion, much below the anticipated $1.84 billion. New Nike CEO Elliott Hill acknowledged heightened competition there, signaling a need for faster innovation.

What does this mean for me? 

Despite these obstacles, Nike is betting on new product innovations and strategic partnerships—like its NikeSKIMS collaboration with Kim Kardashian—to revive growth, particularly among female consumers. 

But the combination of tariff-related pressures, sluggish retail sales, and broader economic uncertainty suggest Nike’s recovery could be slower and tougher than anticipated.