Nike’s turnaround takes shape with better-than-expected sales

Nike Inc.’s turnaround efforts are starting to pay off as the world’s largest sportswear company realigns the business around specific sports such as running and basketball.

Sales fell 1% on a currency-neutral basis in the company’s most recent quarter, according to a statement, which was a smaller drop than investors anticipated. Gains at Nike’s wholesale and running shoe business, which had previously been weak spots, helped fuel sales of $11.7 billion, more than the $11 billion expected by Wall Street.

The company expects sales to decline in the low single digits in the current quarter, in line with expectations.

Nike shares rose 4.3% at 6:24 p.m. in extended New York trading. The stock has dropped 7.8% so far this year through Tuesday’s close.

Chief Executive Officer Elliott Hill has pushed to reset Nike by clearing out old inventory and reorganising its corporate structure, including replacing many top executives. The company is looking to end a prolonged sales slump after previous management pulled back too aggressively from longstanding wholesale partners and overemphasised casual footwear over performance products such as running shoes.

The comeback bid is pinned on refocusing product development and marketing on sports while rebuilding relationships with retailers.

Nike’s running business, which has struggled with competition from brands including On and Hoka, appears to be rebounding. Hill said that Nike has redesigned its three big running franchises – Vomero, Structure and Pegasus – and that’s driving over 20% sales growth in the category in the current quarter.

The company is returning to Amazon.com Inc. for the first time in six years, and its sneakers are back front and centre at Foot Locker’s stores. Last quarter, wholesale revenue rose 5% on a currency-neutral basis to $6.8 billion, beating the average analyst estimate.

Hill trumpeted progress in running and wholesale, but added that progress “won’t be perfectly linear.”

“We know we have a lot left to prove,” he said on a conference call with investors and analysts.

US tariffs and concerns over consumer discretionary spending have weighed on Hill’s turnaround. Nike has raised some prices and now expects to see $1.5 billion in incremental costs from tariffs, up from $1 billion, due to higher levies. The company said tariffs hurt gross margin, a measure of profitability.

Sales in the Greater China region remained weak, with the company facing what it called “structural challenges” there. Hill said he visited the country recently, and Nike is focused on restructuring its offering to focus on specific sports there.

“This will take investment and it will take time,” he said.

The Converse brand is also a problem area, with sales declining 28% in the quarter, adjusting for currencies. Management is in the early stages of resetting the brand’s top sneaker line, Chuck Taylor.

Corporate Structure

Hill has been reworking Nike’s corporate structure at headquarters in Beaverton, Oregon. Nike laid off fewer than 1% of its corporate staff in August, a move that affected divisions across the company.

Nike’s women’s business hit an important milestone last week when it debuted a highly anticipated new brand with entrepreneur and reality TV star Kim Kardashian’s Skims underwear label. NikeSkims, which had been beset by delays, launched its first collections on Friday with a global rollout planned for 2026. Hill said that shopper response to the NikeSkims launch was “very strong.”

“Nike has produced some better results largely thanks to it working more closely and strengthening relations with retail partners,” said Neil Saunders, managing director of GlobalData. “However, there is a lot more work to do here to optimise sales success and chip away at the closer relationships that rivals have built in retail.”

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