Plunging 14% at the open, Nike warns of declining revenue in 2026, with the Middle East situation and high inflation dragging on the recovery process.

Nike released a forecast far more pessimistic than market expectations, raising investor concerns about whether the sports brand’s multi-year transformation plan can progress as scheduled. The company warned that **revenue may decline in fiscal 2026, and the current quarter is also under pressure**. Due to disruptions in Europe and turmoil in the Middle East, Nike’s outlook fell far short of expectations, triggering a sell-off with **shares plunging more than 14% at the open**. Although third-quarter results slightly exceeded Wall Street expectations, this **disappointing outlook greatly diminished the significance of the quarter’s positive results**. CEO Elliott Hill said that while he was “not satisfied” with the company’s current performance, he remains optimistic about progress in priority business areas such as running and football, believing these achievements “point to the future direction of our entire product portfolio.” Quarterly results beat expectations, but outlook guidance weighs on market confidence For the third quarter ending in February, Nike’s revenue was flat at about $11.3 billion, slightly higher than analyst estimates. North American sales grew 3% year-over-year, demonstrating some resilience; net profit was $520 million, up from the prior year and well above Wall Street expectations. However, **management’s outlook for the current quarter disappointed the market**. Nike expects fourth-quarter revenue to drop 2% to 4%, and sales in Greater China to fall about 20%, as the company continues its ongoing inventory-clearing efforts in the Chinese market. CFO Matthew Friend said in a call with analysts that the operating environment has become “increasingly volatile,” and **warned that the unrest in the Middle East and rising oil prices could impact input costs and consumer behavior.** Multiple regional pressures converge; Middle East turmoil becomes a new variable **Nike faces regional pressures from several directions.** Business in Europe, the Middle East, and Africa is also disrupted—Friend said that due to discount promotions and Middle East turmoil, EMEA inventory levels are expected to remain high at the end of the current quarter. Notably, Nike’s fourth quarter starts just as Middle East conflict erupts. CEO Elliott Hill stated the Gulf conflict has not yet significantly affected consumer behavior in North America, which contributes about 45% of Nike’s global revenue. On tariffs, Friend indicated that the first quarter ending in August next year will be “the last quarter where sustained high tariffs materially drag on gross margin year-over-year,” implying tariff pressures may gradually ease thereafter. Transformation process continues; CEO admits he’s not yet satisfied Nike CEO Elliott Hill acknowledged during the conference call that he is “not satisfied” with the company’s current performance, but noted that progress in priority areas such as running and football has already shown potential to drive the entire product portfolio. Hill, a Nike veteran, was brought out of retirement in 2024 to lead the transformation. He pointed out that Greater China, sportswear categories, and the Converse brand are still in the “early stages of recovery.” He also pledged the company will resume providing full-year and long-term performance guidance at this fall’s Investor Day, considered a key step in rebuilding market confidence. However, the unexpected downgrade in sales forecasts has undoubtedly added new uncertainty to the transformation narrative. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account the unique investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Investing based on this article is at your own risk.