01—Abstract
Summary
Summary of the 10-Q filed April 1, 2026. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc. reported flat revenues of $11.3 billiona for the third quarter of fiscal year 2026, with a 3% decrease on a currency-neutral basis.
While overall revenues remained stable, the company is undergoing strategic initiatives to rebalance its product portfolio and marketplace, which have led to a decline in NIKE Direct sales and a reduction in gross margin. For the nine months ended February 28, 2026, revenues increased slightly by 1% to $35.4 billionb, but also showed a 1% decrease on a currency-neutral basis. Profitability was impacted by several factors, including higher tariffs in North America which reduced gross margin by 130 basis points in the quarter.
Net income for the quarter decreased significantly by 35% to $520 millionc, resulting in diluted earnings per share of $0.35. The company is actively managing inventory and repositioning its digital platform while reinvesting in wholesale distribution, which are expected to negatively impact near-term revenues and profitability but are aimed at driving long-term shareholder value. The company also incurred $230 million in pre-tax charges for employee severance costs in the quarter.
02—Key points
Key Highlights
- Revenues for the third quarter of fiscal 2026 were $11.3 billion, flat on a reported basis and down 3% on a currency-neutral basis.
- NIKE Direct revenues decreased 4% on a reported basis and 7% on a currency-neutral basis, primarily due to reduced traffic.
- Gross margin declined by 130 basis points to 40.2% in the third quarter, largely due to higher tariffs in North America.
- Net income for the third quarter fell 35% to $520 million, with diluted EPS at $0.35.
- The company incurred $230 million in pre-tax charges related to employee severance costs in the third quarter.
- Inventories remained flat at $7.5 billion as of February 28, 2026.
- NIKE returned approximately $609 million to shareholders through dividends in the third quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed April 1, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $11.28B$11.27B | +0.1% |
| Cost of Revenue | $6.75B$6.59B | +2.4% |
| Gross Profit | $4.53B$4.67B | −3.1% |
| SG&A Expenses | $3.98B$3.89B | +2.3% |
| Net Income | $520.00M$794.00M | −34.5% |
| EPS (Basic) | $0.35$0.54 | −35.2% |
| EPS (Diluted) | $0.35$0.54 | −35.2% |
| Shares Outstanding (Basic) | 1.48B1.48B | +0.2% |
| Shares Outstanding (Diluted) | 1.48B1.48B | +0.1% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the decrease in gross margin?
The primary driver for the decrease in gross margin by 130 basis points to 40.2% in the third quarter of fiscal 2026 was higher tariffs in North America, contributing to an approximate 270 basis point decrease in NIKE Brand product costs. This was partially offset by higher average selling prices and lower inventory obsolescence reserves.
Why did NIKE Direct revenues decline?
NIKE Direct revenues decreased by 4% on a reported basis (7% currency-neutral) to $4.5 billion in the third quarter. This decline was primarily attributed to reduced traffic on the NIKE Brand Digital platform, which saw a 9% decrease in sales, and a 5% decrease in NIKE store sales.
What is the impact of the strategic initiatives on NIKE's financial performance?
NIKE is implementing strategic initiatives focused on product innovation, marketplace management (repositioning NIKE Brand Digital as a full-price platform and reinvesting in wholesale), and brand management. While these actions are expected to reignite brand momentum and drive long-term shareholder value, they have had a near-term negative impact on revenues and profitability. This is evident in the decline in NIKE Direct sales and the gross margin contraction, driven partly by inventory liquidation strategies including increased markdowns and returns.
What is the outlook for the Greater China segment?
The Greater China segment experienced a 10% revenue decrease (currency-neutral) in the third quarter. The company expects negative impacts from this region to continue throughout fiscal year 2027, citing declining store traffic, elevated promotional activity, and higher inventory levels as contributing factors.
06—Continue