Nike has signaled that revenues could fall in 2026, raising concerns about its ongoing corporate turnaround and prompting an 8.9 per cent drop in shares during after-hours trading on Tuesday. The company cited challenging conditions in greater China and disruptions across Europe and the Middle East, which outweighed resilience in its North American business.
For the fiscal fourth quarter, which began in March amid the US and Israel’s war against Iran, Nike expects revenue to decline 2 to 4 per cent. Sales in China are forecast to fall about 20 per cent as the company continues efforts to “clean up” the marketplace. For the calendar year, Nike anticipates overall revenue to be down 2 to 4 per cent from 2025, with earnings described as “flattish.”
These projections contrast with the third-quarter results, when revenue reached nearly $11.3 billion, slightly above analysts’ expectations. North American sales rose 3 per cent, while greater China experienced a 7 per cent decline. Net income for the quarter was $520 million, surpassing Wall Street forecasts and exceeding the previous year’s figure.
Nike’s chief executive, Elliott Hill, recruited in 2024 to lead the turnaround, acknowledged that performance was unsatisfactory but highlighted progress in key areas such as running and football, which he said “point to where we are ultimately heading across our portfolio.” Certain divisions, including greater China, sportswear, and the Converse brand, remain “earlier in the comebacks,” Hill added.
Chief financial officer Matthew Friend described the operating environment as “increasingly dynamic,” warning that unplanned volatility could arise from Middle East disruptions, rising oil prices, and other factors affecting input costs or consumer behavior. He noted that Nike’s Europe, Middle East, and Africa business faces elevated inventory due to discounting and regional instability, while Hill reported no consumer reaction yet in North America, which accounts for roughly 45 per cent of global revenue.
Looking ahead, Friend said that the first quarter of Nike’s 2027 fiscal year, ending in August, is expected to be the last quarter in which higher tariffs materially weigh on gross margins. Despite near-term headwinds, management intends to return to providing full-year and long-term guidance at an investor day in the autumn, reinforcing the company’s focus on its multi-year turnaround strategy.
via FT
