Nike slows the decline thanks to the holidays and its new sneakers

Published: 2025-03-21 09:19:37 ET NKE

By Thomas Barnet

Nike has limited the damage. The American sports equipment giant reported a 9% drop in Q3 sales to $11.3bn on Thursday after Wall Street closed. A slightly better-than-expected performance: analysts were expecting a steeper decline, of around 11.5%, to $11.01bn. However, the share price lost 5% in after-hours trading, after some procrastination.

Nike owes this temporary upturn to renewed consumer enthusiasm over the festive season. Promotions on emblematic models - Air Jordan 1, Air Force 1, Dunk - seduced buyers. An aggressive destocking strategy enabled the brand to make room for its new collections, while boosting sales.

The launch of the new Pegasus Premium and Vomero 18 was another key factor in the brand's recovery, and was warmly welcomed by the market. These new products, accelerated by the arrival of new CEO Elliott Hill last autumn, are an integral part of the company's turnaround strategy in the face of increasingly tough competition from brands such as Hoka and On.

But all is not rosy at Nike. While the fiscal Q3 ended better than expected, the outlook for the months ahead is a lot gloomier. During a call with analysts, CFO Matthew Friend dampened spirits by anticipating a drop in sales in the "mid -10% range", while the market was only expecting a 12% decline. This announcement caused the share price to plunge 5% in the immediate aftermath.

The reasons: continued destocking, rationalization of the product range, and the need to rebuild solid ties with distributors, weakened under the previous boss, John Donahoe, who had refocused sales on the direct-to-consumer channel.

The brand's $2bn cost-cutting plan, involving job cuts, organizational simplification and product refocusing, has nonetheless borne fruit in terms of profitability. Nike posted EPS of 54 cents, well ahead of the 29 cents anticipated by analysts.

However, there are some worrying signs, notably the situation in China, where sales plunged by 17%. Demand there remains fragile, undermined by economic uncertainties, particularly concerning employment and the real estate sector. Yet this is a strategic market, which the group intends to win back as part of its "Win Now" plan. The plan focuses on five key areas, including a stronger foothold in five major cities: Los Angeles, New York, London, Beijing and Shanghai.

"We have achieved the objectives we set ourselves, but that's not enough. The overall results are not up to our ambitions", admitted Elliott Hill. In other words, the game is far from won, but Nike intends to stay in the race. Laced sneakers, heading for the future.

Thomas Barnet