Shares of athletic footwear and apparel giant Nike (NYSE: NKE) were already off to a tough start in 2026. And the pain intensified on Tuesday afternoon, when the company reported its fiscal third-quarter results. Challenged sales in China and a weak outlook for the current quarter sent shares plummeting, putting the stock below $50 — far below its all-time high of more than $165 in late 2021.
With the stock down so sharply, investors might be wondering if this iconic consumer brand is finally cheap enough to buy.
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Nike’s fiscal third quarter (a period wrapping up on Feb. 28, 2026) shows a business that is still very much in the middle of a turnaround under CEO Elliott Hill.
Sales were flat year over year, and Nike’s gross margin narrowed by 130 basis points to 40.2%, primarily due to higher North American tariffs. This margin compression, combined with a higher tax rate, led to a 35% year-over-year decline in net income to $520 million. And earnings per share similarly fell 35% to $0.35.
Further, the company’s direct-to-consumer channel is struggling. Nike Direct revenues fell 4% year over year to $4.5 billion, and sales at the company’s Converse brand plummeted 35%. Management also pointed to continued sluggishness in the important China market — a stark contrast to the surging sales competitors like Lululemon Athletica (NASDAQ: LULU) are experiencing in that region.
And the company’s outlook was especially disappointing, with the company guiding for fourth-quarter revenue to fall 2% to 4% year over year and Greater China remaining a weakness, with management guiding for sales in the market to decline about 20% year over year.
Management’s expectations for a 20% decline in Greater China is startling, given that sales in the market fell 10% in fiscal Q3. The sharper decline reflects “reduced sell-in” as the company “accelerated actions to clean up the marketplace,” explained Nike chief financial officer Matt Friend in the company’s fiscal third-quarter earnings call.
Despite clear challenges, there are also signs that Nike’s business is stabilizing.
Most notably, the company’s wholesale revenues climbed 5% year over year to $6.5 billion, extending strong momentum in wholesale that only recently resurfaced. After several years of prioritizing its direct-to-consumer channels at the expense of its retail partners, Nike’s renewed focus on the wholesale channel appears to be paying off and driving top-line resilience in North America.
