NIKE's Slump Deepens After Weak Q3 Results: Is the 6% Drop a Red Flag?

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Rajani Lohia

Tue, Mar 25, 2025, 10:43 AM 5 min read

NIKE Inc. NKE has dropped 6.2% since reporting third-quarter fiscal 2025 results on March 20. While earnings per share (EPS) and revenues exceeded the Zacks Consensus Estimate, investor concerns stem from year-over-year declines in both metrics. Sales were impacted by weak traffic, which fell in the double digits, and retail performance lagged expectations. Despite macroeconomic challenges, the sports market continues to grow in China.

NKE provided a cautious fiscal fourth-quarter outlook, citing the expected impacts of new tariffs on imports from China and Mexico. Management anticipates the fiscal fourth quarter to reflect the peak effects of its ‘Win Now’ strategy, with revenue and margin pressures beginning to ease. The company faces ongoing external uncertainties, including geopolitical tensions, tariffs, currency fluctuations and evolving tax regulations. Additionally, macroeconomic volatility and its effect on consumer confidence have been concerning.

For fourth-quarter fiscal 2025, NKE expects a revenue decline in the mid-teens, though at the lower end, due to North American shipment timing and foreign exchange headwinds. The gross margin is projected to drop 400-500 bps, indicating the impacts of prior-year restructuring charges. SG&A expenses are forecast to rise in the low to mid-single digits, including last year’s restructuring charges. The company continues to manage costs while investing in ‘Win Now’ initiatives, particularly in demand creation.

NKE’s lackluster third-quarter fiscal 2025 performance compounds ongoing challenges, including weakness in its lifestyle segment and a decline in digital revenues, reflecting shifting consumer preferences. The company is also grappling with lower retail traffic and sell-through rates in Greater China, a key market in its global strategy. These factors have contributed to slower revenue growth and tighter profit margins.

These factors have affected the Beaverton, OR-based company’s share price performance, which has slumped 27.2% in the past year. Shares of the company have underperformed its industry peers, which collectively declined 24.9% in the past year. The NKE stock compared unfavorably with the broader Consumer Discretionary sector and the S&P 500 Index’s growth of 3.7% and 9.3%, respectively, in the same period.

NKE’s One-Year Price Performance

Image Source: Zacks Investment Research

NIKE's performance is notably weaker than its competitors lululemon athletica inc. LULU and Skechers SKX, which have declined 13.3% and 2.8%, respectively, in a year. NKE has also lagged Adidas’ ADDYY 8.5% growth in the same period.

At the current share price of $67.39, NIKE trades close to its 52-week low mark of $65.17, reached on March 21. The stock price reflects a 3.4% premium to the company’s recent 52-week low. Meanwhile, the NKE stock’s price reflects a 31.3% discount from its 52-week high of $98.04. NIKE trades below its 50 and 200-day moving averages, indicating a bearish sentiment.