Nike (NYSE:NKE) reported quarterly results on Tuesday that exceeded expectations on both earnings and revenue, but the report highlighted ongoing softness in the important Greater China market along with declining gross margins.
Shares of the Dow 30 component dropped more than 9% in premarket trading Wednesday, changing hands at $47.88 by 04:17 ET.
The results come as investors closely watch for signs that CEO Elliott Hill’s turnaround strategy is beginning to take effect. The world’s largest athletic footwear brand has been grappling with falling sales in China and pressure on margins linked to tariffs, while also facing increasing competition from rivals including China’s Anta and Li Ning, Switzerland’s On, and Deckers’ Hoka.
Nike reported earnings of 35 cents per share on revenue of $11.28 billion for the third quarter of its fiscal year 2026. Analysts had forecast earnings of 30 cents per share on revenue of $11.23 billion.
Revenue from Greater China, which accounts for roughly 15% of Nike’s global sales, declined 7% year over year to $1.62 billion, marking the seventh consecutive quarterly drop in the region.
At the same time, gross margin fell by 130 basis points to 40.2%, largely due to tariff-related pressures in North America.
“The big new message was the depth and slow speed of a very deliberate Greater China reset, likely to take four quarters to return to growth,” said Barclays analyst Adrienne Yih in a research note.
However, the analyst added that although Nike shares are “likely to be range-bound in the near term, we continue to view current levels, particularly under $50,” she considers this “as an attractive entry point for investors willing to underwrite a longer-duration recovery.”
Nike brought back veteran executive Hill to lead the company at the end of 2024. Since taking charge, Hill has rolled out a turnaround plan that shifts focus away from the company’s direct-to-consumer strategy toward strengthening wholesale partnerships and speeding up product launches.
“This quarter we took meaningful actions to improve the health and quality of our business. The pace of progress is different across the portfolio and the areas we prioritized first continue to drive momentum,” Hill said in a statement.
“The work is not finished, but the direction is clear, our teams are moving with focus and urgency, and our foundation is getting even stronger to build the future of Nike,” he added.
Because the turnaround plan is expected to take time to show results, Nike’s stock performance has remained under pressure. Shares have fallen 15.8% during 2025 and are down 17.1% so far this year.
However, Jefferies analysts led by Randal Konik said in an earnings preview that Nike’s fiscal third quarter showed “steady progress, with innovation broadening across the portfolio, inventories materially cleaner, and momentum building in (North America) and wholesale.”
Nike’s report showed North America revenue rising 3% year over year to $5.03 billion.
The Jefferies analysts acknowledged that China and Nike Digital remain “areas to work through,” but still recommended “buying shares now”, arguing that the stock’s risk-reward profile is “skewed to the upside.”
“This remains a deliberately sequenced execution story, with China and Nike Digital next in line rather than immediate fixes. At current levels, investors can own one of the most ubiquitous global brands trading at a cycle low 1.6x P/S, even below tariff driven April lows,” the analysts said.
Separately, Raymond James analyst Rick Patel described the company’s results as “disappointing,” adding that “revenue should continue declining low-single-digits through CY26 on lingering headwinds from China, despite modest North America growth.”