Nike's Comeback Plan Falters: Stock Plummets

Nike's stock experienced a significant 9% drop in after-hours trading Tuesday after the company issued weak guidance, indicating its turnaround strategy is taking longer than anticipated. In fiscal 2026's third quarter, total revenue remained flat year-over-year at $11.28 billion, slightly exceeding Wall Street's expectations. Earnings per share, however, saw a 35% decline to 35 cents.

The company acknowledged that its comeback is ongoing, with CEO Elliott Hill stating that "Win Now" initiatives are expected to be completed by the end of the calendar year. This announcement comes as Nike faces challenges, including necessary inventory clearance which impacted reported results. Despite outperforming its own guidance for the quarter, the company's outlook for the upcoming period fell short of market expectations.

Regional performance showed mixed results, with North America sales growing 3% but experiencing an 11% decrease in earnings before interest and taxes. China, however, showed improvement with sales declining only 7% and returning to profitability. Converse sales continued to struggle, falling 35% year-over-year.

Looking ahead, Nike's fiscal 2026 fourth-quarter guidance forecasts revenue to decline 2% to 4%, with gross margins also expected to be down year-over-year, despite sequential improvement. The company plans to host an investor day in the fall to provide a more detailed long-term business outlook.