Nike stock tumbles as tariffs are expected to hit next quarter's results

Nike (NKE) beat modest earnings expectations under new CEO Elliott Hill, but investors remain jittery about the impact of Trump tariffs.

Nike stock fell nearly 8% at market open on Friday.

The footwear giant posted its fiscal third quarter earnings on Thursday after the market close. Its revenue of $11.27 billion surpassed estimates of $11.03 billion, though it marked a drop compared to the $12.43 billion from a year ago.

Read more about Nike's stock moves and today's market action.

Adjusted earnings per share came in at $0.54 compared to estimates of $0.30, but also under last year's $0.98.

The earnings report is the second under Hill, a company veteran who took the helm on Oct. 14. Shares initially popped, then dropped roughly 5% in after-hours trading as the company shared its fourth quarter guidance.

CFO Matthew Friend warned of the impact of Trump's tariffs, including a 20% duty on all goods from China.

"We expect fourth quarter gross margins to be down approximately 400 to 500 basis points, including restructuring charges during the same period last year. We have included the estimated impact from newly implemented tariffs on imports from China and Mexico," Friend said on the earnings call.

Nike reported a gross margin of 44.8% in Q3 last fiscal year. In this third quarter, gross margins dropped year over year to 41.5%, missing estimates of 43%.

Friend said the team is "navigating through several external factors that create uncertainty in the current operating environment, including geopolitical dynamics, new tariffs, volatile for rates and tax regulations as well as the impact of this uncertainty and other macro factors on consumer confidence."

Read more: The latest news and updates on Trump's tariffs

Q4 revenue is expected to be "down in the mid-teens range, albeit at the low end," per Friend. Last fiscal year's fourth quarter revenue came in at $12.61 billion.

Here's what Nike posted in the fiscal third quarter versus Bloomberg consensus estimates:

• Adjusted earnings per share: $0.54 versus $0.30

• Revenue: $11.27 billion compared to $11.03 billion

• Nike brand revenue: $10.89 billion compared to $10.6 billion

"We've been through a lot of change, but what's encouraging is that in the 150 days since I've been back, we've reclaimed our identity. We know who we are. Nike, Inc. is a sports company," Hill said on the earnings call.

The road ahead will not be easy. In recent years, competitors' sneakers from On (ONON), Skechers (SKX), and Hoka (DECK) have taken market share. Meanwhile, a slew of tariff news has reignited inflation fears and shaken consumer confidence, which dropped sharply in February.