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NIKE (NKE) ran past analysts' muted 3Q25 EPS and revenue expectations, but the company's overall results and bleak 4Q25 outlook indicate that it has yet to turn a corner in its turnaround bid. On a yr/yr basis, EPS and revenue fell by 45% and 9%, respectively, and NKE is anticipating more declines in Q4, creating disappointment that its "Win Now" strategy will take longer than expected to produce results. The centerpiece of that strategy, which was implemented by newly appointed CEO Elliott Hill, rests on revitalizing NKE's product innovation machine and rebuilding wholesale partnerships with retailers such as Foot Locker (FL), Dick's Sporting Goods (DKS), and JD Sports.

• Shareholders and analysts were hoping to see some green shoots emerge in the Q4 report. NKE did keep a tight lid on costs -- Selling and Administrative expense decreased by 8% to $3.9 bln -- helping it to comfortably exceed EPS estimates, but there was little else to cheer about. Sales remained quite sluggish, dropping by 4% in North America, the company's largest market, while China saw a 15% decrease on a constant currency basis. 
• Alongside the well-documented company-specific issues than NKE is contending with (market share losses due to lack of new products, margin erosion due to high inventory levels), mounting macroeconomic headwinds are compounding the problem. The company can now tack on tariffs to its list of challenges that it must overcome. Following a 330 bps drop in Q3, NKE is forecasting gross margin to contract by 400-500 bps in Q4, driven by ongoing promotional activities and new tariffs, which will lead to higher manufacturing costs.
• NKE is making progress on the innovation front, investing in new product lines such as a women's activewear collaboration with Kim Kardashian's Skims, as well as a collaboration with Supreme that will feature a new Air Max 1 launch. However, NKE's new products aren't expected to have a material impact on its financials until 2H26. Mr. Hill noted last night that Q4 will reflect the largest impact from "Win Now" actions with the revenue and gross margin headwinds moderating from there.
• In the meantime, NKE will have to muddle through another rough quarter in Q4. The company guided for a mid-teens decrease in revenue, skewing towards the low end of that forecast. Although inventory was down by another 2% in Q3 to $7.5 bln, the company is still working through older merchandise, leading to heightened promotional activity. 
• Mr. Hill has offered some encouraging commentary regarding NKE's efforts to rebuild its relationships with wholesale partners. He stated that he's confident that the company's renewed focus on product innovation will strengthen its relationships with retail partners. Following another revenue decrease in the Wholesale business (-7%) in Q4, participants will be looking for some improvement next quarter and in the subsequent quarters.

NKE's dismal Q4 guidance is raising concerns about the effectiveness of Mr. Hill's turnaround strategy and the lack of meaningful progress shows the magnitude of the company's troubles. Still, from a longer-term perspective, NKE's powerful brand name and proven track record of success lends confidence that the company will dig itself out of this deep hole.