Nike reports revenue of $11.3 billion: exceeds forecasts, but margins continue to fall

Nike Inc. reported its financial results for the third quarter of fiscal 2026, with figures that exceeded market expectations in both revenue and earnings per share, although with clear signs of pressure on profitability amid a challenging environment marked by higher costs and weakness in key markets.

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The company reported revenue of $11.279 billion, virtually unchanged compared to the same period last year, but above analysts’ forecasts, which had anticipated a slight decline.

In terms of profits, Nike posted earnings per share (EPS) of $0.35, beating market estimates, although representing a 35% year-over-year decline.

CEO Elliott Hill highlighted that the company is taking steps to improve business quality, including reducing promotions, focusing more on innovation, and strengthening key categories.

What drove Nike’s results this quarter?

Nike’s performance was mainly supported by its wholesale channel, which showed signs of recovery:

• Wholesale revenue: $6.5 billion
• Growth: +5% year-over-year

This progress was driven by greater stability in North America, the company’s main market.

In contrast, the direct-to-consumer channel (NIKE Direct) declined:

• NIKE Direct revenue: $4.5 billion
• Change: -4%
• Digital sales: -9%
• Physical stores: -5%

This behavior reflects an adjustment in the company’s strategy, which has reduced promotions to protect margins and reposition its brand.

Nike’s margins remain under pressure

One of the most relevant points in the report was the decline in profitability. The gross margin fell to 40.2%, a reduction of 130 basis points compared to the previous year and the sixth consecutive decline.

The company attributed this drop mainly to the impact of higher tariffs in North America, as well as increased operating costs.

Additionally, net income fell to $520 million, down from $794 million the previous year, representing a 35% decrease.

China and digital, the weak spots

Geographically, Nike showed mixed performance:

• North America: +3% growth
• Europe, Middle East and Africa: +2%
• Greater China: -7%
• Asia Pacific and Latin America: +1%

China remains the most challenging market for the company, with declining sales and increasing competitive pressure from local brands.

At the same time, the digital channel also showed weakness, reflecting slower consumer demand and adjustments in commercial strategy.

Performance by categories and brands

Nike’s business continues to rely mainly on footwear:

• Footwear: $7.353 billion (+2%)
• Apparel: $3.184 billion (flat)
• Equipment: $468 million (-2%)

Meanwhile, the Converse brand recorded a significant decline:

• Converse: $264 million (-35%)

Costs, taxes and financial pressure

Costs also played a key role in the deterioration of profits:

• Cost of sales: $6.749 billion (+2%)
• Administrative expenses: $3.977 billion (+2%)

Additionally, the effective tax rate rose to 20%, compared to 5.9% the previous year, directly impacting net income.

Nike maintains financial discipline

On its balance sheet, the company showed signs of operational control:

• Inventories: $7.487 billion (-1%)
• Cash and investments: $8.1 billion (↓ $2.3 billion)

Nike also maintained its shareholder return policy, with $609 million in dividends, representing a 3% increase and extending to 24 consecutive years of dividend growth.

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