Nike reported third-quarter revenue of $11.27 billion for the three months ending Feb. 28. It marked a 9% decline from the previous year’s quarter, but handily topped Wall Street’s already pessimistic expectation of $11.03 billion, per S&P Global Market Intelligence. Earnings per share of $0.54 nearly doubled the $0.29 estimate.
The market expected a lousy quarter from the sportswear giant as it works to clear inventory and increase engagement with its wholesale partners. But the third quarter results offer some green shoots that the turnaround plan under CEO Elliott Hill are bearing fruit. In October, Hill returned to Nike to replace John Donahoe as CEO.
“We’re beginning to drive a more diversified portfolio,” Hill said during the earnings call. “It will take time to reach the volume to replace the handful of classic franchises we over indexed, but our approach is simple, help consumers fall in love with something new from Nike.”
Nike did not address tariffs in its financial release or on the earnings call. Concerns might be overblown as they relate to Nike. In a recent investor note, Telsey Advisory Group expected a muted impact on Nike with the 15% of its products manufactured in China largely to serve the Chinese market and few imported to the U.S.
The earnings report comes a day after a Bloomberg reported Nike’s lead strategy and communications executives—Daniel Heaf and and KeJuan Wilkins—are both leaving the company. It adds to the list of senior leadership changes under Hill.
Greater China was the worst performing region for Nike with sales down 18%, while North America, which is the largest market at $4.9 billion, was down only 4%. The Nike and Jordan brands represent the bulk of the company’s revenue, but the firm also breaks out Converse revenue, which was $405 million, down 18% for the quarter with declines across all territories. NBA MVP candidate Shai Gilgeous-Alexander has helped raise the profile of that brand.
“Nike is getting back to being Nike again,” Jeffries analyst Randal Konik wrote in a quick reaction research note to the news. “We think this journey takes 2 years, but our call is for a V-shaped recovery in F27.”
Last month, Konik upgraded his rating from hold to buy and made Nike his current favorite pick. He sees an upside case for the stock at $140 based on 35x his 2027 fiscal year earnings per share estimate of $4.00. The base case has the stock at $115.
Nike’s stock was the second-worst performer among the 30 components of the Dow in 2024 with a 30% drop. Its 7.2% decline the prior year made it the third-worst stock in the Dow.
The stock closed Wednesday at $71.86 and was down 5% in after-hours trading.
