Companies

Nike reports drop in revenue and profits in the third quarter

Apr 2, 2025 United States

The US-based sportswear company has reported a drop in revenue and profits in the third quarter of the year, as it continues its turnaround strategy to improve long-term profitability

“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 of Nike.

Third Quarter Results

In the third quarter of fiscal year 2025, which ended on the 28^th of February, the company’s revenue totalled 11.3 billion US dollars, a decrease of 9% on a reported basis and 7% on a currency-neutral basis, as compared to the same period of the last fiscal year.

The Nike brand contributed 10.9 billion US dollars to the total revenue, a decline of 9% on a reported basis and 6% on a currency-neutral basis versus the prior year, driven by weak performances in all regions. Converse contributed the remaining 405 million US dollars, a decline of 18% on a reported basis and 16% on a currency-neutral basis versus the prior year.

In the third quarter of the current fiscal year, Nike’s gross margin contracted by 330 basis points year-on-year to 41.5% due to higher discounts, inventory obsolescence provisions, product costs and channel mix changes, partially offset by restructuring charges in the prior year.

The company’s selling, general and administrative expenses fell by 8% to 3.9 billion US dollars, driven in part by a 13% reduction in operating overheads to 2.8 billion US dollars, which was impacted by last year’s restructuring charges of 340 million US dollars and lower labour costs. Demand creation costs rose by 8% to 1.1 billion US dollars, mainly due to increased investment in brand marketing.

Nike’s third quarter net income decreased by 32% to 0.8 billion US dollars and diluted earnings per share decreased by 30% to 0.54 US dollars, as compared to the third quarter of fiscal year 2024.

Balance Sheet

At the end of February, the company’s inventories were 7.5 billion US dollars, down by 2%, on a comparable basis to the same period of the prior year, reflecting product mix shifts, partially offset by an increase in units.

Cash equivalents and short-term investments were 10.4 billion US dollars, down by approximately 0.2 billion US dollars on a comparable basis to the same prior year period, as cash generated from operations was more than offset by share repurchases, cash dividends and capital expenditures.

“Our outlook for the second half of fiscal 2025 driven by our 'Win Now' actions remains consistent with what we communicated last quarter. The operating environment is dynamic, but what matters most for NIKE is serving athletes with new product innovation and re-igniting brand momentum through sport”, commented Matthew Friend, Executive Vice President and Chief Financial Officer.

Image Credits: houseofheat.co

United States Companies Nike Quarter Results Results Sportswear