Clarify the shaping of the low-single-digit revenue decline for the calendar year, especially regarding North America vs. Greater China, and the timing of earnings inflection.

Management confirmed the 9-month guidance period (Q4 FY26, Q1 FY27, Q2 FY27) for low-single-digit revenue decline, with North America momentum offset by Greater China headwinds due to intentional reduced sell-in. They reiterated confidence in Win Now actions and highlighted that gross margins are expected to inflect positively in Q2 FY27, setting the stage for earnings recovery. “Our approach to providing guidance for the calendar year is really about pulling up at this moment and providing transparency to the financial trajectory of the business over the next 9 months.”

Can you provide color on the health of the D2C gross margins and confirm if the $230 million severance charge is fully booked into operating overhead?

Elliott emphasized a shift to a balanced, integrated marketplace, with DTC being a critical but not exclusive focus. Matt highlighted North America digital improvements, including sequential growth, strong launches, and improved average retail discounts. He confirmed the $230 million severance charge was booked in SG&A, primarily in supply chain and technology, to reset the cost base. “We did with our focus on sports see strong results across our NIKE stores around the world, lining up against sport, getting behind key sport moments. But on the Digital side, in North America, we saw continued improvement in the gap between wholesale and direct.”

Given the Q4 revenue guidance and China's decline, what is the expected shape for EMEA in Q4, and will positive margin offsets continue?

Matt stated that Q4 EMEA will continue to see growth in performance categories like Running and Training, driven by World Cup and product launches. However, softness in Sportswear and disruption from the Middle East are factored into the outlook. He implied that while the team is managing the marketplace carefully, the challenges in Sportswear and macro environment will impact Q4. “The comments that I made on EMEA in the fourth -- sorry, in the third quarter, definitely impact the way we're thinking about the fourth quarter.”

NKE

NIKE (NKE) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Feb 2026 (Q3 FY26)· Consumer Discretionary· Mar 31, 2026

Source: earnings call transcript

Executive summary

NIKE, Inc. Q3 FY26 — Strategic Rebalancing and North America Momentum

NIKE, Inc. is executing a strategic rebalancing, shifting from a NIKE Direct-first approach to an integrated marketplace model. While progress is being made in key areas like North America and Running, the overall comeback is taking longer than expected due to ongoing marketplace cleanup, particularly in Sportswear and Greater China. The company anticipates completing its "Win Now" actions by calendar year-end, with gross margin expansion expected to begin in Q2 FY27.

Highlights

NIKE Running revenue increased over 20% for the quarter, leading the Sport Offense.
North America revenue grew 3%, with wholesale revenue up 11% and underlying profitability improving for three consecutive quarters.
Overall inventory decreased 1% year-over-year, with units down mid-single digits.
Air Force 1 and AJ1 franchises stabilized, showing month-to-month improvement in full price realization.

Concerns

Total revenue was flat on a reported basis and down 3% currency-neutral.
Gross margins declined 130 basis points to 40.2%, primarily due to a 300 basis point impact from higher tariffs in North America.
NIKE Direct revenue decreased 7%, with Digital down 9% and stores down 5%.
Sportswear declined low double digits, continuing to be a headwind to revenue growth.
Q4 revenue is expected to be down 2% to 4%, with Greater China projected to decline approximately 20%.

Guidance & targets

Category	Target	Timeline	Confidence
Completion of Win Now actions	By the end of the calendar year high materiality	Calendar Year 2026	High
Revenue growth	down low single digits versus the prior year high materiality	Next 9 months (Q4 FY26, Q1 FY27, Q2 FY27)	High
Gross margin headwind from tariffs	final quarter where higher tariffs continue to be a material year-over-year headwind medium materiality	Q1 · FY27	High
Gross margin expansion	begin in the second quarter high materiality	Q2 · FY27	High
Earnings	flattish high materiality	Next 9 months (Q4 FY26, Q1 FY27, Q2 FY27)	High
Q4 FY26 Revenue	down 2% to 4% high materiality	Q4 · FY26	High
Greater China Q4 FY26 Revenue	down approximately 20% high materiality	Q4 · FY26	High
Q4 FY26 Foreign Exchange Benefit	2-point benefit medium materiality	Q4 · FY26	High
Q4 FY26 Gross Margin	down approximately 25 to 75 basis points high materiality	Q4 · FY26	High
Q4 FY26 SG&A dollars	flat to down slightly medium materiality	Q4 · FY26	High
Q4 FY26 Other expense net of interest income	expense of $15 million to $25 million medium materiality	Q4 · FY26	High
Full year FY26 Effective Tax Rate	low 20% range medium materiality	FY26	High
H1 FY27 Revenue	look to the range we provided for Q4 as a guide high materiality	H1 FY27	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
North America Leading the comeback with sustained momentum. Digital business improved sequentially, and sell-through improved in February, marking the first time in 2 years with positive growth across all channels. Underlying profitability improved for 3 consecutive quarters. NIKE Direct growth_yoy: -5%NIKE Digital growth_yoy: -7%NIKE stores growth_yoy: -1%Wholesale growth_yoy: 11%Running growth: double digitsGlobal Football growth: double digitsBasketball growth: high single digitsSportswear growth: double digits declineInventory dollars growth: low-single digitsInventory units growth: high-single digits declineGross margins decline: 360 bps (650 bps impact from new U.S. tariffs)	—	3%	—	-11% EBIT
EMEA Presented both progress and challenges. Performance business built momentum, led by Running. Sportswear sell-through did not track with expectations, leading to increased promotions and elevated inventory. Traffic disruption from the Middle East also impacted performance. NIKE Direct growth_yoy: -13%NIKE Digital growth_yoy: -6%NIKE stores growth_yoy: -20%Wholesale growth_yoy: -4%Running growth: double digitsSportswear growth: double digits declineInventory dollars growth: double digitsInventory units growth: mid-single digits	—	-7%	—	7% EBIT
Greater China Made forward progress despite revenue decline. Wholesale sell-in was managed down, and seasonal sell-through rates improved sequentially. Expanded NIKE store pilot to 100 doors. Actions to improve position will continue throughout FY27, creating a headwind to revenue growth but with profitability expected to bottom sooner. NIKE Direct growth_yoy: -5%NIKE Digital growth_yoy: -21%NIKE stores growth_yoy: 1%Wholesale growth_yoy: -13%Running growth: double digitsTennis growth: growthGolf growth: growthACG growth: growthKids growth: flatSportswear growth: double digits declineInventory dollars growth: mid-teens declineInventory units growth: more than 20% declinePartner inventory growth: double digits decline	—	-10%	—	11% EBIT
APLA Saw bright spots in Running, Training, and Football. Strong launch of NikeSKIMS in Australia and Korea. Closeout mix remains elevated, and the team is focused on addressing excess inventory. Performance across territories expected to remain mixed. NIKE Direct growth_yoy: -8%NIKE Digital growth_yoy: -12%NIKE stores growth_yoy: -3%Wholesale growth_yoy: 3%Running growth: double digitsTraining growth: growthFootball growth: growthSportswear growth: double digits declineInventory dollars growth: high-single digitsInventory units growth: low-single digits decline	—	-2%	—	-4% EBIT

NKE operating KPIs by quarter

NKE operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Aug 2025 Q1 FY26	Nov 2025 Q2 FY26	Change vs prior quarter
Stores China	5,000+ With over 5,000 mono-brand stores in China, this will take investment, and it will take time. Source: earnings call transcript	5,000 As you know, it's a mono-brand marketplace with thousands of -- 5,000 doors with the teams working the presentation of our product at retail and we weren't making the investment in our store fleet, so our stores aren't compelling. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Nike Mind platform	launch	Q3 FY26
New Mercurial	launch	June
Aero-FIT kits	launch	World Cup '26
Nike Air (thermal layer)	launch	Q3 FY26
Liquid Air Max platform	launch	Q3 FY26
NikeSKIMS	launch	Q3 FY26
Cricket footwear innovation	launch	Q3 FY26

Risks & headwinds

Unhealthy inventory of classic footwear franchises Q3 FY26

5-point headwind to reported results

Mitigation:Intentional removal of inventory to improve marketplace health and quality of revenue.

Digital business too promotional and elevated markdowns Ongoing

Headwind to gross margin profitability

Mitigation:Teams pulling levers to manage inventory and protect brand health; shifting to full price realization in Greater China.

Higher tariffs in North America Q3 FY26; Q1 FY27 expected final material headwind

300 basis points impact on Q3 gross margin; nearly 650 basis points gross impact on North America gross margin

Mitigation:Actions to mitigate tariffs and recovery of transitory impacts from Win Now expected to lead to gross margin expansion in Q2 FY27.

Sportswear decline Q3 FY26

Low double digits decline (overall); double digits decline (North America, EMEA, Greater China, APLA)

Mitigation:Moving from defense to offense, investing in a sophisticated city offense to incubate new styles, leveraging unmatched vault.

EMEA marketplace challenges Q3 FY26 and Q4 FY26

Highly promotional marketplace; Sportswear sell-through below expectations; traffic disruption from Middle East; elevated inventory expected in Q4

Mitigation:Aggressive promotions on NIKE Digital to manage inventory; new leadership in place focusing on performance and integrated marketplace.

Greater China structural challenges and marketplace dynamics Q3 FY26 through FY27

Revenue declined 10% (Q3 FY26); Q4 revenue expected down approximately 20%; headwind to revenue growth through FY27

Mitigation:Taking actions to clean the marketplace, tighten execution across digital and physical retail, rebuild brand locally through sport; reducing near-term sell-in to align with full price demand.

APLA excess inventory Over the coming quarter

Closeout mix remains elevated

Mitigation:Team focused on actions to address excess inventory.

Macro environment volatility Near-term

Unplanned volatility due to disruption in the Middle East, rising oil prices, and other factors

Mitigation:Focused on controllable factors; assumptions reflect macro environment as it stands today.

Q&A highlights

Why has EMEA decoupled from North America's success, and what is the strategy to fix it?

Management acknowledged both progress (double-digit growth in Running) and challenges in EMEA, particularly softness in Sportswear sell-through and increased promotional activity. They cited macro pressures, traffic disruption from the Middle East, and ongoing Win Now actions. New leadership is in place, focusing on performance, an integrated marketplace, and improved assortments.

“This quarter, we highlighted that we didn't see sell-in where we were hoping sell-in to be specifically on our Sportswear business. And it's really connected to a theme that we've been talking about for several quarters.”

asked by Lorraine Maikis · answered by Matthew Friend

3 min read 7 chapters

Detailed narrative

Strategic Rebalancing and Win Now Actions

NIKE, Inc. is executing a strategic rebalancing, shifting from a NIKE Direct-first approach to an integrated marketplace model that serves consumers across multiple channels. This involves deliberate actions like removing unhealthy inventory from classic footwear franchises, which created a 5-point headwind to Q3 reported results but is improving marketplace health.

The company aims to complete its "Win Now" actions by the end of the calendar year, focusing on building brand by brand, sport by sport, and country by country.

Momentum in Sport Offense

The Sport Offense is gaining traction, with NIKE Running revenue up over 20% for the quarter, serving as a roadmap for other sports. Global Football is the next focus, with new product launches like Tiempo and the upcoming Mercurial in June, alongside plans to elevate presentation in over 5,000 football doors for the World Cup '26.

This strategic shift prioritizes performance products to drive authenticity and create a halo effect for sportswear.

Innovation Pipeline and Scalable Platforms

NIKE introduced several innovative platforms, including Nike Mind, which has over 150 patents filed globally, sold out in all geographies, and saw production doubled for the next two seasons. Other innovations include Nike Air as a self-inflated thermal layer in apparel, a new Liquid Air Max footwear platform, and Aero-FIT apparel, which increases airflow by 200% and will expand into multiple sports.

These platforms are designed as scalable foundations for long-term growth.

North America Performance and Marketplace Health

North America revenue grew 3% in Q3, driven by an 11% increase in wholesale. The Digital business improved sequentially, and sell-through improved in February, marking the first time in two years with positive growth across all channels in the geography.

Underlying profitability in North America has improved for three consecutive quarters, despite a 650 basis point gross impact from new U.S. tariffs, indicating progress in managing transitory headwinds.

Sportswear and Streetwear Turnaround

After intentionally reducing over $4 billion of revenue from peak levels of classic footwear franchises, the Air Force 1 and AJ1 have stabilized with improving full-price realization. The company is investing in a "city offense" to incubate new styles, exemplified by the successful reintroduction of the Air Max 95.

While work remains, the Sportswear and Streetwear teams are moving from defense to offense, leveraging consumer insights for creation around comfort and innovation.

Cost Reset and Profitability Initiatives

NIKE incurred a $230 million charge in Q3 for employee-related severance costs, primarily in supply chain and technology, as part of an effort to reset its cost base. These actions are expected to lower costs, streamline operations, and shift the supply chain network to a more variable cost structure.

Benefits from these initiatives are anticipated to begin in fiscal '27 and continue through fiscal '28, supporting long-term profitability.

Challenges in Greater China and EMEA

Greater China revenue declined 10%, with Digital down 21%, due to intentional reduced sell-in and ongoing marketplace cleanup actions, which are expected to continue through FY27. EMEA revenue was down 7%, experiencing increased promotional activity and Sportswear sell-through below expectations, leading to elevated inventory. The company is taking actions to address these regional challenges, including new leadership and a more local approach in China.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.