Snapshot
NIKE, Inc. reported $11.28B of revenue in Q3 2026, up 0.1% year over year, with diluted EPS of $0.35 and an operating margin of 4.9%.
- Revenue
- $11.28B
- YoY growth
- +0.1%
- Diluted EPS
- $0.35
- Operating margin
- 4.9%
What management said
- •Please refer to Nike's earnings press release or Nike's website, investors.nike.com, for comparable GAAP measures and quantitative reconciliations.
- •All growth comparisons on the call today are presented on a year-over-year basis and are currency neutral unless otherwise noted.
- •It was intentional, it was necessary, and while it weighed on the quarter, it is improving the health of the marketplace, the quality of our revenue, and the foundation for more sustainable growth ahead.
- •We responded by doubling production of Nike Mind over the next two seasons to meet demand from more than 2,000,000 consumers who signed up for Notify Me on nike.com.
- •These platforms are scalable foundations for growth that we can extend them into multiple sports and price points over time.
- •You saw the early signs of those actions this quarter, and it is a critical step in our return to double-digit EBIT margins.
- •From here, we expect that to translate into consistent growth in North America.
- •Momentum in running continues to be strong, and we expect football, training, and basketball to return to growth over the next few quarters.
- •Sportswear continues to be a headwind to revenue growth as it declined low double digits in the quarter.
- •Our teams are pulling levers to manage inventory and protect brand health, but this continues to be a headwind to gross margin profitability.
- •Gross margins declined 130 basis points to 40.2% on a reported basis, primarily due to 300 basis points associated with higher tariffs in North America.
- •Those investments also resulted in a higher fixed cost base that weighed significantly on our EBIT margins as revenue came down.
What went well
- •Nike Running grew over 20% for the quarter, serving as the roadmap for other sports, while global football grew double digits in North America and basketball was up high single digits there.
- •North America Q3 revenue grew 3% with wholesale up 11%, and the geography drove positive growth in all channels for the first time in two years as February sell-through improved.
- •North America underlying profitability improved for the third consecutive quarter despite nearly 650 basis points of gross tariff impact, giving confidence in recovering transitory margin headwinds.
- •The new Nike Mind innovation platform, with over 150 patents filed globally, sold out in all geographies and prompted Nike to double production over the next two seasons amid over 2 million Notify Me signups.
- •Greater China showed forward progress with running up double digits, the Nike store pilot expanded to 100 doors improving traffic and comp sales, and inventory down mid-teens with units down more than 20%.
- •The company announced a fall Investor Day and several scalable innovation platforms including liquid Air Max and Aero-FIT, which increases airflow 200% over regular Dri-FIT.
What went wrong
- •Revenue was flat on a reported basis and down 3% currency-neutral, with further removal of unhealthy classic franchise inventory creating roughly a five-point headwind to reported results.
- •Gross margins declined 130 basis points to 40.2%, primarily due to 300 basis points associated with higher tariffs in North America.
- •Sportswear declined low double digits and remained a headwind, declining double digits in every geography.
- •EMEA revenue was down 7% with Nike Stores down 20%, inventory grew double digits, and the company expects to exit Q4 with elevated inventory amid soft sportswear, promotions, and Middle East disruption.
- •Greater China revenue declined 10% with wholesale down 13%, and Nike incurred a $230 million employee severance charge primarily in supply chain and technology, plus Converse cost right-sizing.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Revenue | Through end of calendar 2026 (next nine months) | None | Down low single digits | North America gains offset by Greater China declines |
| Gross margin inflection | Q2 FY2027 | None | Expected to inflect positively | Setting the table for earnings inflection |
| Tariff gross margin headwind | Q1 FY2027 | None | Final quarter of material year-over-year headwind, assuming no significant changes | Headwind ending after Q1 FY2027 |
| Cost reset benefits | FY2027-FY2028 | None | Benefits begin in FY2027 and build through FY2028 | From supply chain and technology severance actions |
| North America revenue | Next nine months | None | Modest growth | Even as it laps value liquidation |
| Win Now actions completion | End of calendar 2026 | None | Expected to be finished | Aged inventory across marketplace healthy |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total revenue | Flat reported, down 3% currency-neutral | Roughly five-point headwind from removing unhealthy classic franchise inventory |
| Gross margin | Down 130 bps to 40.2% | Primarily 300 basis points of higher tariffs in North America |
| North America revenue | Up 3% (wholesale up 11%) | New distribution, lapping marketplace management actions, and improving February sell-through |
| EMEA revenue | Down 7% | Double-digit sportswear decline, higher promotions, soft traffic, and Middle East disruption |
| Greater China revenue | Down 10% (wholesale down 13%) | Managed-down sell-in and marketplace cleanup, partially offset by double-digit running growth |
| Sportswear | Down low double digits | Still early in its comeback and declining double digits across all geographies |
| Earnings per share | $0.35 | Reported result, including a $230 million severance charge and offsetting legal settlement income |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Comeback stage | Middle innings | Far enough into the work to set a fall Investor Day; Win Now actions to finish by end of calendar 2026 | Progressing toward completion |
| Cost base reset | Not previously detailed | $230 million severance charge in supply chain and technology, shifting to a more variable cost structure | Newly initiated |
| Tariffs | Approximately 320 bps gross, 120 bps net FY2026 | 300 bps of Q3 margin impact; Q1 FY2027 to be final material year-over-year headwind | Nearing end |
| Greater China | Unplanned obsolescence, longest road | Forward progress, store pilot at 100 doors, but revenue headwind continuing into FY2027 while profitability bottoms sooner | Early improvement |
| EMEA | Healthy marketplace, building momentum | Down 7%, elevated inventory expected at Q4 exit, sportswear and Middle East pressure | Worsening near term |
| Sport Offense product flow | Activated September | Spring 2027 will be first quarter of product flowing from the Sport Offense | Pipeline building |
Q&A summary
EMEA performance seems to have decoupled from North America's early success; how do you diagnose the problems and what is the strategy to fix it?
Friend said EMEA showed both progress and challenges, with running up double digits but sportswear sell-in below hopes amid macro traffic pressure, higher promotions, and Middle East traffic disruption, expecting to exit Q4 with elevated inventory but confident in completing Win Now actions by year-end. Hill added that new 25-year Nike veteran leader César García is refocusing the team from sportswear reliance toward performance and an elevated, integrated marketplace.
How should we think about the shaping of revenue and earnings across the calendar-year guidance period and the timing of inflection?
Hill emphasized the Win Now actions remain the right moves with proof points in running, football, wholesale, and North America, while China commerce and sportswear are earlier. Friend said the nine-month guidance reflects revenue down low single digits with North America modest growth offset by Greater China headwinds, and crucially that margins are expected to inflect positively in Q2 FY2027, setting the table for earnings inflection.
Can you share color on D2C gross margins and the quality of that channel, and quantify the severance booked into operating overhead?
Hill said Nike is moving from a direct-to-consumer-first model to serving consumers across a balanced, integrated marketplace while gaining back shelf space. Friend said North America saw the most improvement in direct quality, with sequential digital growth, strong launches across Nike and Jordan, improved average retail discounts, and the first positive growth in all channels in two years.
Is the fourth quarter down 4% reported or currency, and what are the major puts and takes in EMEA in Q4 given strong Q3 margins despite the revenue decline?
Friend said EMEA Q4 will continue to see performance growth and World Cup excitement with double-digit running, but the change is on the sportswear side where sell-through trended below expectations, so the outlook takes into account managed sportswear and anticipated Middle East traffic disruption, while North America momentum and a strong summer order book continue with no observed consumer reaction to the Middle East.
How much additional reset is needed in the Classics franchise by geography, and are there green shoots in North America sportswear?
Hill said sportswear and Jordan Streetwear are moving from defense to offense, with Air Force 1 and AJ1 stabilizing and showing month-to-month full-price improvement while the Dunk still needs work. He cited green shoots in strong full-price launches including the AJ11 Gamma, AJ5 Wolf Grey, and Air Max 95, with the team building creation around comfort and innovation while leveraging the vault.
What is the health of the global sportswear backdrop, and can you parse self-inflicted headwinds from underlying demand in the back-half revenue declines?
Hill said sportswear will remain a large, critical part of the industry and Nike's growth, taking a bottoms-up, local approach, and expressed positivity on the overall athletic industry. Friend said the Q4 range is a reasonable guide for the first half of FY2027, highlighting North America sustaining momentum with more balanced channel growth tempered by lapping off-price liquidation, EMEA and APLA completing Win Now actions by year-end, and Greater China managing sell-in with profitability bottoming faster than revenue.