Nike Faces Q4 Sales Dip Amidst China Slowdown

Nike Inc. on Tuesday signaled that revenue is likely to decline in its fourth quarter, a forecast that surprised investors and pushed the company’s shares down more than 9% in extended trading. The company tied the outlook to continued softness in China and slower-than-expected progress in working through older inventory, factors it said are weighing on its turnaround efforts.

Chief Financial Officer Matt Friend said Nike expects current-quarter sales to drop by 2% to 4%. That guidance contrasted with Wall Street expectations for a 1.9% increase, underscoring the gap between the company’s near-term reset and market assumptions about the pace of improvement.

China was a central driver of the cautious outlook. Nike reported that sales in China fell 10% in the third quarter, an improvement from the prior quarter’s 16% decline. Even with that sequential improvement, the company said it anticipates a much steeper 20% drop in China sales in the upcoming quarter as it works to reduce inventory in the region.

The China exposure is material for Nike’s global business. The company described China as its third-largest market, representing 15% of annual sales. The expected near-term decline therefore has implications not only for regional performance but also for consolidated results, particularly as Nike manages product flow and pricing while attempting to clear older stock.

Against that backdrop, Nike’s third-quarter results showed mixed signals across channels. Total revenue was flat at $11.28 billion, and it exceeded analysts’ average estimate of an $11.24 billion decline. Wholesale revenue rose 5% to $6.5 billion, which the company said was supported by steady sales in North America, while direct-to-customer revenue fell 4%.

Profitability trends remained under pressure. Nike said its gross profit margin narrowed for a sixth straight quarter, falling 130 basis points to 40.2%. The company attributed the margin contraction primarily to tariffs, highlighting how trade-related costs can affect global consumer brands even when revenue holds up.

For investors and policymakers tracking global consumer demand, Nike’s update adds a fresh data point on China’s retail environment and on how multinational companies are adjusting inventory and distribution strategies. Key uncertainties include how quickly Nike can reduce older inventory in China and whether the expected 20% regional sales drop proves temporary or persists beyond the upcoming quarter.