Nike Turnaround: Marathon, Not a Sprint, as Tariffs Weigh and Digital Sales Dip 15%

Nike’s fiscal 2025 third quarter results offered up a snapshot of just how biting the trade war and tariffs may be. They offered a snapshot of waning consumer demand.

And above all else the numbers — though not as bad as Wall Street might have feared — show that Nike’s turnaround will take time, a marathon and not a sprint.

As for those numbers released after the markets closed on Thursday (March 20), for the quarter that ended last month: Revenues were down 9% year over year to $11.3 billion, while the Street had expected a double digit-drop to the $11 billion level.

But looking forward, and as noted by CFO Matthew Friend, tariffs on imports from China and Mexico will hit margins by 4% to 5%. And revenues will decline in the midteens range, as management said on the call.

The stock slumped 4% in after-hours trading.

Full-Price Digital Model

Within the consolidated top line, Nike Brand revenues were $10.9 billion, down 9% on a reported basis, amid declines seen across all geographies. Nike Direct revenues were $4.7 billion, down 12%, and driven by a 15% decline in Nike digital sales, and a 2% dip at the companies stores.

Said Friend on the call, with discussion of the digital sales: “We are repositioning Nike Digital within an integrated marketplace. To do this, we are reducing promotional days, reducing markdown rates and shifting closeout liquidation to our Nike factory stores.”

Digital traffic is expected to be down “double digits in fiscal 2026,” he said, adding that “gradually, we expect organic traffic to stabilize and grow with new product launches and our increased brand marketing investments. … For Nike Digital, we are tightening our buys to support a full-price business model. For Nike factory stores, we are increasing markdowns to drive velocity of higher volumes of closeout inventory.”

During the call with analysts, CEO Elliott Hill, discussing the second quarter of his relatively new tenure at the helm of the company, said, “While we met the expectations we set, we’re not satisfied with our overall results. We can and will be better.

“For the quarter, the big takeaway for me was clear. When we lead with sport, we create impact for Nike. … We’re beginning to drive a more diversified portfolio. It will take time to reach the volume to replace the handful of classic franchises we over-indexed on.”

Those actions will include diversifying sportwear apparel, he said. And across the brand, “We’re already reducing the promotional days and discounting at lower rates. In fact, comparing last year’s January and February to this year’s Nike Digital and North America [sales] went from over 30 promotional days to zero,” Hill said.

CFO Friend’s commentary on product lines and consumer demand were marked by declines in Nike sportswear and the Jordan brand, “led by a double-digit decline in our classic footwear franchises. These franchises again decelerated faster than the overall business with a more pronounced impact on Nike Digital.”

North America revenues slipped by 4%; in the EMEA region, revenues slipped 6%, and in that segment Nike Direct was off 12% and digital sales declined 25%. China sales plummeted 15%, as Nike Digital sales there were off 29% and Nike store sales slumped 6% as traffic declined double digits.

Navigating Uncertainty

“The market continues to be promotional especially in consumer … and in the digital channel,” Friend said of the China market.

Overall, he said, “We are also navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile foreign exchange rates and tax regulations, as well as the impact of this uncertainty and other macro factors on consumer confidence.”

Moving through those headwinds, Hill said, “We are going to run a balanced and complete portfolio. That’s why I want to make sure everybody on the call hears that. We’re going to run that through all three brand — Nike, Jordan, Converse — across performance, sportswear, men’s, women’s, kids, footwear, pro accessories, and up and down price points.”

Elsewhere, as Hill said, “We’ve been through a lot of change, but what’s encouraging is that in the 150 days since I’ve been back, we’ve reclaimed our identity. We know who we are. … Nike Inc. is a sports company.”