Nike struggles amid sales slump and layoffs, forecasts margin pressure

Nike, a leading sports maker, is facing challenges in a year marked by declining sales and corporate layoffs, as it strives to regain momentum. The company's third-quarter results revealed a 9 percent revenue decrease to 11.3 billion dollars.

The gross margin dropped by 330 basis points to 41.5 percent, net income fell 32 percent to 0.8 billion dollars, and diluted earnings per share decreased by 30 percent to 54 cents.

"The progress we made against the 'Win Now' strategic priorities we committed to 90 days ago reinforces my confidence that we are on the right path," said Elliott Hill, president and CEO, a longtime Nike executive who came out of retirement to take the top role in October.

Nike brand revenues were 10.9 billion dollars, a 9 percent decline driven by decreases across all geographic regions. Nike direct revenues were 4.7 billion dollars, down 12 percent, while wholesale revenues were 6.2 billion dollars, down 7 percent. Converse brand revenues were 405 million dollars, down 18 percent.

Despite these overall negative results, Nike announced dividends of 594 million dollars, a 6 percent increase from the previous year.

Looking forward, Nike anticipates a significant gross margin decline in the current quarter compared to the prior year, attributed to reduced consumer spending, the clearance of outdated merchandise through substantial discounts, and US tariffs on products from China and Mexico.

During an investor call, CFO Matthew Friend stated, “geopolitical dynamics, new tariffs, volatile foreign exchange rates and tax regulations” are among factors creating uncertainty.