Nike, Inc. announced plans to report its fiscal 2025 third-quarter results tomorrow, Thursday, March 20, after the market closes. The market will keep a close eye on the comments from management regarding the company’s progress on inventory reduction, the impact of Nike’s shift in clearance activity to factory stores from e-commerce, managing supply vs. demand in key lifestyle franchises, including AJ1, AF1 and Dunk, the pace of Nike’s product innovation, the potential for new branded products and the timing of same, and any retro products the company plans to make a comeback that could help re-energize Nike’s brand heat.

While those factors are central to the storyline surrounding the turnaround process at Nike, driven by new CEO Elliott Hill, the broader macro factors in the marketplace will also be watched and discussed when assessing the path forward for the largest athletic footwear and sportswear company worldwide.

Based on notes from several analysts, the consensus is an expectation that Nike will report a sales decline in the low teens for the fiscal third quarter ended February 28.

Tariffs, for one, appear to be on everyone’s mind as the media runs with continuous stories regarding trade wars. Even in footwear, there have been weekly hair-on-fire articles and multiple interviews from the industry trade about tariffs causing footwear sales to fall — even before any tariff went into effect.

Others argue that February’s weather significantly impacted retail traffic and consumer purchasing.

Citibank analysts said in a pre-earnings note this week that coming out of a  sell-side meeting in early February, after which the firm downgraded NKE shares, “uncertainty around macro/tariffs has only increased, suggesting mgmt could be even more cautious on their outlook.”

Athletic footwear has not felt the impact too much surrounding tariff issues with Canada or Mexico, and China is the only country with increasing tariffs. Footwear companies are downplaying the effect as production has moved to other countries since the last tariff fight during Trump 1.0, which former President Biden continued.

For instance, Telsey Advisory Group (TAG) said in a recent investor note that it did not expect a significant direct impact on Nike from tariffs given that “the majority of Nike products manufactured in China (15 percent of the total) serve the Chinese market, with only a small portion of those imported into the U.S.”

TAG further said that Adidas and Under Armour have noted that only 3 percent to 4 percent of the products manufactured in China are sold to U.S. consumers.

“Overall, companies are relatively well positioned for tariffs given mitigation strategies including cost-sharing with suppliers, shifting sourcing out of China, and price increases on products that have less elasticity,” BofA Securities noted recently in a recap of its annual Consumer Conference in Miami with brands and companies it covers.

TAG sees the challenges for Nike elsewhere.

“Nike faced several challenges in 3QF25, including lower consumer demand for its products, resulting in lower traffic to Nike stores and website, declines in orders from its wholesale accounts, a reduction in units of three key lifestyle franchises, and higher promotions to clear inventory,” the firm wrote in its pre-earnings note.

Bank of America Securities said in its pre-earnings note that it would “focus more on words than the numbers” in Nike’s March 20 conference call for the fiscal third quarter. The company also noted that management is moving quickly to reset the marketplace and clear aged inventory to allow a pipeline of newness to hit.

BofA is maintaining its “Buy” rating as it believes Nike’s third-quarter results will matter less than its message about the product reset cycle and evidence that the company’s new product is resonating with retailers and consumers.

“We expect wholesale will improve ahead of DTC over the next several quarters as partners purchase holiday newness in advance,” BofA wrote.

BofA also said a lack of visibility on the product reset and consumer spending more broadly could cause management to wait another quarter to offer a fiscal 2026 outlook.

Margins are a concern in the near term, given the need for Nike to liquidate inventory. While the company continues to pull back promotions on its website, outlet stores will continue to see increased pressure.

Keeping the Nike brand clean with its retail partners is also top-of-mind, as evidenced by the reaction to increased promotional activity during the quarter.

“The mojo at Nike has improved, as has the strategic engagement with wholesale accounts since Elliot Hill became CEO last October,” wrote Williams Trading analyst Sam Poser. “Our checks indicate that Nike’s engagement with its wholesale partners has not only improved dramatically over the past 9 months but is said to be better now than it was well before 2020.”

On product, BofA wrote, “On the earnings call, we don’t expect to hear a major revelation on product, but we will listen for early product wins, whether it’s in running with the Vomero 18 or Pegasus Premium, or basketball. Signs of product wins will be the singular most important catalyst to reengage investors on the stock, in our view.”

Poser said retailers are most positive on Jordan Retros, Air Force Ones, Pegasus Premium, Vomero Plus & Vomero Premium, the Diamond Turf, the DTMax, and several other styles, including core sneakers at or below a $100 retail price point, focused on the family channel, which he said was “virtually left for dead under NKE’s prior administration.”

Citibank Research asked consumer participants in its February Global Sporting Goods Survey (see more here) if they observed any changes in the level of promotions of athletic footwear and/or clothing compared to the last time they shopped in the category. In February, 42 percent of respondents said they see somewhat to significantly higher promotions, similar to the 42 percent surveyed in December and 40 percent in September 2024.

BofA noted that one of the inventory actions now used at Nike is buying back products from retail partners, leading to elevated inventory on the company’s balance sheet.

“We argue greater near-term margin pain actually improves the set-up for the stock, as this is a sign that Elliot Hill’s emphasis on taking swift action to make way for new product is working as planned,” The bank wrote in its note.

What are the analysts saying?

  • Citibank expects a fiscal 2025 Q3 EPS beat, driven by lower SG&A, and expects sales/GM to be in line with consensus estimates but weak overall.
  • BofA is forecasting fiscal 2025 Q3 EPS of 22 cents (Visible Alpha consensus 28 cents). “We argue 3Q results will matter less than the message about where we are in the product reset cycle and evidence that new product is resonating.”
  • Telsey said it is modeling a sales decline of 12 percent versus the FactSet (FS) consensus of an 11.3 percent decline and Nike’s guidance of down LDD, with constant-currency (CC) sales down 10 percent.
  • Telsey further estimated that fiscal full-year EPS would come in at $2.11 (FS at $2.07), with a sales decline of 10.4 percent to $46.0 billion (FS consensus at down 10.4 percent to $46.0 billion), including CC sales decline of 9.7 percent and operating margin contraction of ~437 bps to 7.9 percent of net sales (FS at 7.8 percent).
  • Williams Trading expects trends to noticeably improve within the fiscal 2026 second quarter. “In the meantime, retailers’ response to holiday ’25 products is positive, and it appears that orders for that period (October, November, December deliveries), which are imminently due to Nike, will be up MSD-HSD, and trends should further improve heading into 3Q26,” Williams wrote in a March 10 note.
  • Williams believes that Nike’s fiscal 2025 Q3 revenue and margins will be under pressure and come in as guided, with revenue down LDD and gross margin down ~350 bps.

Image courtesy Nike, Inc.