Nike, Inc. is expected to meet or exceed guidance when it reports its fiscal third-quarter results on Tuesday, March 31. Analysts are interested in hearing about potential World Cup benefits for the brand and whether Nike’s North American topline momentum reached another gear. However, a major focus for investors will be Nike’s margin recovery in the coming quarters, amid bloated inventories in China and continued tariff uncertainty.

According to consensus estimates, Nike is expected to earn 29 cents per share in the quarter ended February 28, marking a year-over-year decline of 46.3 percent. Revenues are expected to reach $11.27 billion, unchanged from the prior-year quarter.

On its fiscal second-quarter analyst call on December 18, Nike officials forecast third-quarter revenue would decline in the low single digits, after growth of 0.6 percent in the second quarter.

“Modest growth” was forecast for the third quarter in North America. In the second quarter, sales in North America grew 9 percent, as a 24 percent increase in wholesale sales offset a 10 percent decline in direct-to-consumer (DTC) sales. Sales at wholesale were boosted by liquidation efforts, while DTC weakness, in part, reflected efforts to reduce online promotions.

Nike officials also forecast that third-quarter performance in Greater China and Converse would be similar to the company’s second-quarter results, when sales on a currency-neutral basis fell 16 percent in China and 31 percent at Converse.

Nike forecast Q3 gross margins in the quarter to be down roughly 175 to 225 basis points, including a 315-basis-point impact from higher gross product costs related to new tariffs. Excluding the tariff impact, gross margin expansion was expected to be positive. Nike expected Q3 SG&A dollars to be up low single digits due to higher marketing expenses and investments in its Sport Offense strategy.

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At Bank of America, Lorraine Hutchinson expects Nike’s Q3 results to generally align with consensus estimates. She expects “continued signs of NA progress in 3Q,” although wholesale gains in North America are expected to moderate from the clearance-boosted increases seen in the second quarter.

Hutchinson also sees potential for gross margin stability in the fourth quarter as tariff mitigation efforts ramp up and due to a possible benefit from the Supreme Court’s IEEPA ruling. The analyst noted that Nike “remains cautious” about raising prices to offset tariffs as it executes its turnaround. Hutchinson, in a note, also shared that Nike’s World Cup apparel range, featuring its latest Aero‑Fit cooling fabric, recently reached stores and could boost fiscal Q4 and Q127 sales.

On the downside, Hutchinson expects another challenging quarter for Nike in China, writing, “While we expect partner store remodels to benefit sales, digital remains a highly promotional channel that will be tough to fix.” She also said the impact of the Iran conflict “will be a key question” for the EMEA region. Hutchinson reiterated her “Buy” recommendation on Nike at a $73 price target. Hutchinson wrote, “The continued progress in NA gives us increased confidence in Nike’s turnaround potential globally.”

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At Citi Research, Paul Lejuez expects Nike’s third-quarter sales to be slightly above consensus on a currency-neutral basis while EPS comes in slightly below. The analyst said, “We believe the focus will be on F27, and high-level commentary about order books, the shape of the year and regional progress.”

Among regions, he expects “cont’d positive commentary” about North America, although he likewise expects smaller gains in Q3 versus the promotionally-driven Q2. He expects Nike to continue its “cautious tone” on China and become “incrementally more cautious” on the EMEA region. Lejuez sees Nike guiding Q4 sales to come in flat, below analysts’ consensus target of a 1.7 percent increase, with an implied EPS target in the range of 10 cents to 15 cents, below the consensus of 20 cents.

Lejuez said his team will want to hear whether NA wholesale has maintained its momentum, whether NA DTC is showing any recovery, and whether promotional pressures have worsened in the EMEA region. He’s also seeking more clarity on turnaround strategies in China, marketing investments behind the World Cup and their potential payoff, and how recent tariff changes impact margins and Nike’s pricing decisions.

Citi kept its “Neutral” rating on Nike at a $65 target. Lejuez wrote, “We remain cautious in the medium-term given the size/scale/complexity of the NKE turnaround.”

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At Stifel, Peter McGoldrick sees Nike’s sales and EPS coming in slightly above consensus targets and expects Nike to guide Q4 above consensus, supported by signs of healthy demand for World Cup merchandise and “improving channel health.”

He noted that Stifel’s February channel checks show Nike recaptured market share from Adidas and New Balance, “supporting the view of NIKE’s dominant share position driving revenue durability.”

McGoldrick still maintained its “Hold” rating on Nike, with a price target of $65. The analyst said that while Stifel will be listening for revenue growth expectations for FY27 and progress on returning to double-digit operating margins, the likely “long-term achievable target” for Nike’s operating margins is 12 percent, given margin pressures in China due in part to heightened competition from local players, including  Anta, Li Ning, Xtep, and 361 Degrees. McGoldrick wrote, “While we view near-term setup favorably, we struggle to make a risk-adjusted upside case.”

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At RBC Capital Markets, Piral Dadhania sees Nike’s third-quarter earnings coming in line with analysts’ consensus targets but believes fourth-quarter margin guidance may come in lower than expected due to the impact of U.S. tariffs, negative channel mix, and potential disruption from the Iran conflict.

Beyond margin guidance for the current quarter, Dadhania’s team will be listening for product pipeline timing for basketball and sportswear footwear launches, China’s recovery prospects, the World Cup opportunity, and DTC strategy.

Dadhania views China’s recovery “as an important sentiment driver for Nike’s equity story” that could extend over two years. He wrote in a note, “There are major required fixes relating to inventories, brand relevance, product competitiveness, marketing effectiveness, store network refresh & digital organic vs paid traffic drivers.”

However, the analyst reiterated his “Outperform” rating at a $78 price target on top-line recovery potential. He noted that website traffic trends turned positive in January for the first time since July 2024. Dadhania said, “We see no reason Nike cannot return to growth, noting Adidas’ strong current execution as a comparator.”

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Williams Trading’s Sam Poser expects Nike’s third-quarter results to meet or exceed guidance and consensus expectations. He also expects fiscal fourth-quarter guidance to be better than consensus targets as order backlog continues to improve. The analyst wrote in a note, ‘Trends in North America continue to improve, Europe appears stable, APLA is a mixed bag (Latin America improving, and Asia Pacific stabilizing), and Greater China and Converse remain works in progress.”

Poser, who reiterated his “Buy” rating at a $80 target, said his team’s checks indicate that the U.S. marketplace “is clean, as are most global marketplaces,” and he expects China’s sales to inflect positively in the first quarter of Nike’s fiscal 2027 year.

Overall, Poser sees the combination of improving product offerings, cleaner global marketplaces, and a 4 percent reduction in expected tariffs will result in FY27 results coming in “well ahead” of the current consensus estimates.

“NKE’s ground game to support its retail partners and consumers is being put back in place on a global basis, as is its return to focus on sport rather than lifestyle,” wrote Poser. “Performance-based running product is gaining traction. Jordan Retro, new Air Max offerings, the recovery of Air Force 1, and a promising beginning to sales of Jordan Jumpman product to Academy and the family channel are leading the improvements in North America.”

Image courtesy Nike, Inc. (shown Kevin Durant wearing Nike KD19)