Pedestrians walk past a Nike store featuring a modern design and mannequins displaying winter apparel on December 5, 2024, in Wuhan, Hubei Province, China.
Cheng Xin | Getty Images
Nike will report fiscal third-quarter earnings after the bell on Thursday and provide updates on its turnaround plan as it navigates new tariffs and soft consumer spending.
Here’s what analysts are expecting from the world’s largest sneaker company, according to consensus estimates from LSEG:
- Earnings per share: 29 cents
- Revenue: $11.01 billion
Expectations are low for Nike as it works to implement a turnaround under its new CEO Elliott Hill. Margins could face pressure as Nike moves to clear out old merchandise in favor of new, innovative styles and reset its relationship with wholesalers. The company is also contending with a new set of dynamics that could make its comeback even harder to execute.
Since Nike last reported earnings in December, President Donald Trump has put a new 20% tariff on goods imported from China, consumer sentiment has fallen, and retail sales in both January and February were weaker than expected.
Out of the hundreds of suppliers and manufacturers that Nike works with, about 24% of them are located in China, according to a manufacturing disclosure published in January. If the retailer doesn’t raise prices to offset tariffs and can’t push the cost entirely on to suppliers, Nike’s margins are expected to take a hit from the new duties.
Further, when consumers aren’t feeling confident and cutting back on spending, discretionary products like new clothes and shoes are one of the first things they cut out in favor of necessities. Over the last few years, the overall sneaker and apparel markets have been slow because consumers have cut back on clothes and shoes. But up until recently, strong companies were still performing well and taking market share from weaker competitors.
However, that trend began to shift over the last few weeks when even the strongest of companies started to sound the alarm about soft consumer spending when they reported first-quarter earnings, raising questions about the health of the economy.
Nike is widely expected to reclaim the market share it lost and reset its business, and some insiders say the company’s problems have been overblown. Even so, the tariffs and economic fears could mean that the retailer’s turnaround could take longer, and be more difficult, than expected.
Nike has already made strides in winning back market share and growing its female customer base, a key component to boosting revenue and apparel sales. Last month, it announced it was teaming up with Kim Kardashian’s intimates brand Skims to create a new product line dubbed NikeSKIMS that will include apparel, footwear and accessories. The buzzy partnership is expected to give Nike improved inroads with women and allow it to better compete with Lululemon, Alo Yoga and Vuori, which cater more to women than Nike currently does.
Further, Nike debuted a new ad campaign geared toward female athletes during the Super Bowl, its first big game advertisement in decades. The campaign showed that reaching female athletes and capturing the buzz around women’s sports will be a center point of Hill’s strategy.
When Nike hosts its earnings call at 5 p.m. ET, analysts and investors will want to know how new product launches are faring as the company restarts its innovation engine. Some analysts say clues into the product pipeline will be the most important detail to listen for during the call because Nike’s ability to innovate and put out the best products in the industry is what made it the market leader in athletic apparel and shoes.
If it can show positive signs from new product launches, the rest of its headwinds might just be drowned out as noise.