By Wall Street

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

The company said efforts to roll out new products, boost marketing efforts and clear out old inventory helped blunt a longtime sales slump — results that buoyed shares in Nike by about 4 per cent in premarket trading.

The stock had dropped about 8 per cent this year through Tuesday’s close as investors waited for Nike to show signs that its comeback bid is actually working. On Wednesday, Nike’s better-than-expected results also boosted European sportswear stocks, with both Adidas AG and Puma SE shares climbing.

Sales at Nike fell 1 per cent on a currency-neutral basis in its most-recent quarter, the company said, a smaller drop than investors anticipated. Gains at Nike’s wholesale and running shoe business, previous 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 projections.

Still, Chief Executive Officer Elliott Hill stopped short of proclaiming victory. “We know we have a lot left to prove,” he said on a conference call with investors and analysts.

Hill has tried to reset Nike by clearing out old inventory and reorganising its corporate structure. He laid off less than 1 per cent of its corporate staff, replaced a slew of top executives and mended ties with longstanding wholesale partners. He also reframed the company’s focus on sports and product development over casual footwear and other fashion items.

One early bright spot appears to be running, a category that has been crushed by competitors such as On and Hoka. Hill said that Nike has redesigned its three big running franchises – Vomero, Structure and Pegasus – and that’s driving over 20 per cent sales growth in the category in the current quarter.

Nike’s women’s business could also see a bump from the debut of NikeSkims, its new line with entrepreneur and reality TV star Kim Kardashian’s Skims underwear label. After a series of delays, Hill said that shopper response to the NikeSkims launch was “very strong.” A global rollout is planned for 2026.

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

Hill trumpeted progress in running and wholesale, but said Nike’s comeback “won’t be perfectly linear.”

Analysts, similarly, cheered the quarter’s improvements. The “turnaround is mostly on track,” but the story remains balanced by a still-skeptical medium to long-term view,” said Morgan Stanley’s Alex Straton.

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 — long a sore spot for Nike — 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,” Hill said, echoing a refrain that Nike executives have recycled on conference calls before.

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

“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 optimize sales success and chip away at the closer relationships that rivals have built in retail.”

More stories like this are available on bloomberg.com

Published on October 1, 2025