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    NKE
    Earnings call· Feb 2026(Q3 FY26)

    NIKE Q3 FY26 earnings call NKE

    Mar 31, 2026 Source

    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

    4

    • 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

    5

    • 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

    13
    CategoryTargetConfidence
    Completion of Win Now actions
    By the end of the calendar year
    high materiality
    High
    Revenue growth
    down low single digits versus the prior year
    high materiality
    High
    Gross margin headwind from tariffs
    final quarter where higher tariffs continue to be a material year-over-year headwind
    medium materiality
    High
    Gross margin expansion
    begin in the second quarter
    high materiality
    High
    Earnings
    flattish
    high materiality
    High
    Q4 FY26 Revenue
    down 2% to 4%
    high materiality
    High
    Greater China Q4 FY26 Revenue
    down approximately 20%
    high materiality
    High
    Q4 FY26 Foreign Exchange Benefit
    2-point benefit
    medium materiality
    High
    Q4 FY26 Gross Margin
    down approximately 25 to 75 basis points
    high materiality
    High
    Q4 FY26 SG&A dollars
    flat to down slightly
    medium materiality
    High
    Q4 FY26 Other expense net of interest income
    expense of $15 million to $25 million
    medium materiality
    High
    Full year FY26 Effective Tax Rate
    low 20% range
    medium materiality
    High
    H1 FY27 Revenue
    look to the range we provided for Q4 as a guide
    high materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    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

    Operational metrics

    5
    Employee-related severance charges
    $230 million
    Q3 FY26

    Incurred to reset the cost base and improve long-term profitability.

    Other income
    from legal settlements
    Q3 FY26

    Contributed to other income in the quarter.

    Revenue reduction from classic footwear franchises
    $4 billionfrom peak levels
    FY26

    Intentional reduction to clean up the marketplace and improve brand health.

    Nike Mind production increase
    doubled
    Next 2 seasons

    To meet demand from over 2 million consumers who signed up for notify me on NIKE.com.

    Aero-FIT airflow increase
    200%over regular Dri-FIT
    Q3 FY26

    New elite apparel cooling platform, expanding into multiple sports.

    Industry KPIs

    11
    MetricValueDetails
    China trajectory-10%%
    Effective tax rate20%%
    Inventory position-1%%
    Revenue by channel—
    Gross margin bridge40.2%%
    Revenue by geography—
    Operating margin sg a—
    Store fleet door investment—
    Tariff cost exposure recovery—
    Wholesale order book directionGrowing
    Franchise product cycle performance—

    Product announcements

    7
    ProductTypeDetails
    Nike Mind platformlaunch
    New Mercuriallaunch
    Aero-FIT kitslaunch
    Nike Air (thermal layer)launch
    Liquid Air Max platformlaunch
    NikeSKIMSlaunch
    Cricket footwear innovationlaunch

    Risks & headwinds

    8
    Unhealthy inventory of classic footwear franchisesQ3 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 markdownsOngoing

    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 AmericaQ3 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 declineQ3 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 challengesQ3 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 dynamicsQ3 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 inventoryOver the coming quarter

    Closeout mix remains elevated

    Mitigation: Team focused on actions to address excess inventory.

    Macro environment volatilityNear-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

    6

    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 read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.