ar
Nike reported its Q3 2025 earnings and beat analysts’ expectations. However, its stock price fell 9% on Friday as the sports retail giant warned that sales could drop by double-digits in percentage terms in the current quarter as Nike contends with new tariffs, sliding consumer confidence and a slower than expected turnaround.
Nike’s Q3 2025 Performance
Nike reported EPS at $0.54, which was higher than the forecast of $0.30. Revenue came in at $11.27 billion, which also beat estimates of $11.01 billion.
Despite the strong numbers, revenue was down by 9% from last year, mainly driven by weakness in China. During the quarter, sales fell 17% in China to $1.73 billion, falling short of expectations of $1.84 billion. ⁽¹⁾
Nike faced challenges in the quarter, with direct sales falling 12% to $4.7 billion and wholesale revenue falling 7% to 6.2%. Nike is going through a new landscape of economic pressures, such as 20% tariffs on Chinese goods, weak US retail sales and weak consumer sentiment.
Tariffs could impact profits if the company cannot reduce costs through inflation or supplier negotiations, especially when 24% of Nike’s suppliers are based in China. ⁽²⁾
Source: TradingView
The retail sector in the US has weakened, as consumers are spending less on discretionary products such as clothes and sneakers. While Nike and other major brands previously gained market share despite a slow apparel sector, recent earnings reports suggest that even industry leaders are now struggling with weaker demand. North American sales fell 4% to $4.86 billion. ⁽³⁾
Nike is expected to regain its dominant position and will try to maintain it. However, concerns on tariffs and economic uncertainty might indicate that the rebound in losses could take more time. ⁽⁴⁾
What Lies Ahead for Nike?
Nike expects its sales to decline as the company continues to push discounts to clear inventory and hopes to rebound sales. ⁽⁵⁾
Nike also projects gross margins will be down between 4-5% from a decline of 3% in Q3 2025. ⁽⁶⁾
The challenges impacting both revenue and margins come down to the impact from higher tariffs on imports from China and Mexico, foreign exchange pressure and the effects of uncertainty on consumer confidence. ⁽⁷⁾
