NIKE(NKE) The Motley Fool·2025-03-23 16:06Core Viewpoint - Nike reported better-than-expected earnings and revenue for its fiscal third quarter, but the stock price fell sharply due to management's cautious outlook for the upcoming quarter, indicating potential further declines in revenue and profitability [2][4][6]. Financial Performance - Nike's earnings were 0.29, but down from 11.3 billion [4]. - Direct-to-consumer sales fell by 12% year over year, while wholesale revenue declined by 7% [5]. Strategic Challenges - The company is undergoing a strategic reset to recover from past decisions made during the COVID pandemic, which included a focus on new styles and a reduction in wholesale partnerships [3]. - Nike is currently working to rebuild relationships with wholesale partners and clear excess inventory, even at the expense of profitability [3]. Management Outlook - Management expects short-term headwinds to worsen in fiscal Q4, with revenue projected to decline in the mid-teens range [6][8]. - Gross profit margin is anticipated to decrease by 400 to 500 basis points year over year [8]. Market Conditions - External factors such as geopolitical dynamics, new tariffs, volatile foreign exchange rates, and tax regulations are contributing to uncertainty in the operating environment, impacting consumer confidence [7]. Investment Sentiment - Despite Nike's strong brand, the current strategic reset and ongoing revenue declines create significant uncertainty, leading to a recommendation for investors to remain cautious and possibly wait for clearer signs of recovery before investing [9].