Nike Q3 EPS Outperforms, Revenue Down 9%
Nike posted a strong EPS beat, despite a year-over-year drop in revenue.
Sports apparel giant Nike (NKE) reported fiscal 2025 third-quarter results on Thursday, March 20, that topped analysts’ consensus estimates. Earnings per share (EPS) of $0.54 exceeded expectations of $0.30. Revenue beat projections at $11.27 billion but fell 9% year over year.
Overall, the quarter reflected mixed results, with significant earnings driven by operational efficiencies overshadowing lingering revenue hurdles and gross margin pressures.
| Metric | Q3 2025 | Analysts’ Estimate | Q3 2024 | Change (YOY) |
|---|---|---|---|---|
| EPS | $0.54 | $0.28 | $0.77 | (30%) |
| Revenue | $11.27 billion | $11.02 billion | $12.4 billion | (9%) |
| Net income | $0.8 billion | — | $1.2 billion | (32%) |
| Gross margin | 41.5% | — | 44.8% | (3.3 pps) |
Source: Nike. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. pps = percentage points.
Nike’s Business Overview
Nike is the world’s leading supplier of athletic footwear and apparel, known for its iconic “Swoosh” logo. The company’s brands include Nike, Air Jordan, and Converse. Product innovation remains core to its strategy, with a focus on enhancing athletic performance via advanced technologies. This, coupled with strong brand recognition, helps sustain its dominant market position. In the past few years, Nike has emphasized direct selling to consumers via digital platforms and company-owned stores, maximizing margins and consumer engagement. A significant focus lies on leveraging innovations like AI to tailor consumer experiences.
Despite the market challenges, Nike aims for continued growth through brand storytelling and engaging with athletes. The direction towards a “Win Now” strategy underscores its focus on strengthening brand strength and spearheading product innovations.
Quarterly Highlights
The third quarter proved challenging financially but saw Nike achieving an EPS of $0.54, defying the analyst estimates considerably. This was aided by strategic cost management and shedding restructuring expenses from previous periods. Total revenue reached $11.27 billion, slipping 9% year over year largely because of regional struggles like Greater China, where revenue plummeted 17% in the quarter. These trends indicate significant regional economic impacts and ongoing competitive pressures.
Direct-to-consumer revenue of $4.7 billion for the quarter dipped 12% year over year, in part, because digital sales faltered by 15%. This contradicts management’s efforts at a digital transformation. Gross margin decreased to 41.5% due to pricing strategies and changing sales channels. However, operational costs were reduced by 8%, partly offsetting gross margin declines. Marketing expenditures increased by 8%, illustrating investments in branding endeavors and strategic partnerships.
One-time events also left their mark. Notably, the tax rate dropped from 16.5% to 5.9%, thanks to a significant deferred tax benefit. Meanwhile, Nike continued prioritizing shareholder returns, allocating about $1.1 billion through dividends and buybacks.
Looking Ahead
From a product perspective, Nike continued innovation in sports apparel despite declining sales figures. Its commitment to “Win Now” remains robust, backed by renewed marketing contracts with major sports leagues, indicating persistent brand alignment with top athletic experiences.
Nike management offered only minimal guidance that reiterated its fiscal 2025 second-half outlook, aiming to spur product innovation. Elsewhere, management has emphasized a readiness to tackle a dynamic market landscape to regain brand momentum. While geopolitical and economic uncertainties persist, its structured approach seeks to leverage ongoing product developments and robust marketing to restore growth.
Investors should watch for how Nike balances inventory management and enhances its direct-to-consumer strategy. Positive developments in international markets, especially Greater China and Europe, remain pivotal for overcoming recent revenue struggles. Nike’s proactive stance in addressing these volatile markets will be essential in sustaining future growth trajectories while fostering its leading global brand status.
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