Nike Beats Q3 Estimates but China Weakness and Margin Pressure Weigh on Outlook

Nike (NYSE: NKE) posted better-than-expected fiscal third-quarter 2026 results, reporting earnings of 35 cents per share on revenue of $11.28 billion — topping analyst forecasts of 30 cents per share and $11.23 billion in sales. Despite the headline beat, shares fell 2.6% in after-hours trading as investors focused on persistent challenges in Greater China and shrinking profit margins.

The Greater China segment, which contributes roughly 15% of Nike's total global revenue, declined 7% year-over-year to $1.62 billion — marking a seventh consecutive quarterly drop. The region remains one of the most closely watched indicators of Nike's long-term health, especially as domestic Chinese competitors like Anta and Li Ning continue gaining ground. Gross margin also contracted 130 basis points to 40.2%, largely driven by tariff-related headwinds in North America.

CEO Elliott Hill, who returned to lead the company in late 2024, acknowledged that the turnaround is still a work in progress. His strategy involves rebuilding wholesale partnerships, reducing reliance on direct-to-consumer channels, and accelerating new product development. North America showed early signs of improvement, with revenue climbing 3% year-over-year to $5.03 billion, suggesting that parts of the recovery plan are gaining traction.

Nike stock has declined roughly 17% year-to-date in 2026, reflecting investor impatience with the pace of the turnaround. However, analysts at Jefferies remain optimistic, pointing to cleaner inventory levels and improving wholesale momentum as reasons to buy the stock at current levels. They note that at a price-to-sales ratio of approximately 1.6x — near cycle lows — Nike offers an attractive entry point for long-term investors willing to look past near-term uncertainty.

China and Nike's digital business remain the next key areas requiring meaningful improvement as the brand's broader recovery continues to unfold.