NIKE sees early signs of footwear normalization as running and football momentum builds

NIKE is starting to look less like a company in free-fall and more like one working through a long reset. In recent commentary around its fiscal 2026 third-quarter performance, executives pointed to early stabilization in key footwear areas as running and football gained traction, supported by product innovation and a broader effort to repair the health of the wholesale marketplace.

For the quarter ended Feb. 28, NIKE reported third-quarter revenues of $11.3 billion, flat on a reported basis and down 3% on a currency-neutral basis. Wholesale revenues were $6.5 billion, up 5% on a reported basis, while NIKE Direct revenues were $4.5 billion, down 4% reported and down 7% currency-neutral. Gross margin fell 130 basis points to 40.2%, with management citing tariff-related pressure in North America. Diluted earnings per share came in at $0.35, down 35% year over year. Inventory for the company totaled $7.5 billion, down 1%, reflecting unit declines and product mix shifts, partially offset by higher product costs tied to tariffs.

The stabilization narrative is closely tied to NIKE’s “Win Now” strategy, which management describes as deliberate marketplace cleanup and sport-by-sport repositioning. On the company’s earnings call, NIKE said it removed “unhealthy inventory” from classic footwear franchises, creating roughly a five-point headwind to reported results. Executives said that Air Force 1 and AJ1 (Air Jordan 1) “stabilized this quarter,” and that NIKE is still working through the remaining holdovers in other classic lines such as Dunks. Management also warned that digital remains too promotional and that markdowns across the marketplace are still elevated, even as sell-through improved in February.

Category momentum has been one of the clearest indicates. NIKE said “momentum in running continues to be strong,” and that football, training and basketball are expected to return to growth over the next few quarters. In the quarter, management stated that running and global football grew double digits, while Sportswear declined low double digits. The company framed that mix shift as a move to invest more heavily in performance categories that it believes can generate more consistent demand than streetwear-heavy assortments during a reset.

Innovation is playing an explicit role in NIKE’s plan to support those categories. Executives highlighted new platforms designed to scale across sports and price points. NIKE described its “Nike Mind” platform, which management said was the highlight of the quarter and reportedly sold out across geographies. For football, NIKE discussed “Aero-FIT,” an apparel cooling platform positioned for elite performance, and said it is expected to expand into multiple sports, including NIKE Running in the fall. Management also linked the football effort to the World Cup cycle, saying NIKE would elevate presentation in thousands of football doors globally with wholesale partners and NIKE Direct.

NIKE also said its wholesale relationships have been improving alongside the product and inventory changes. The company pointed to order books growing and efforts to take back shelf space, while still acknowledging that sell-through has not yet reached the level it wants. In geographic terms, NIKE said North America led the comeback in the quarter, with North America revenue up 3%, wholesale growing 11%, and underlying profitability improving over three consecutive quarters. In contrast, it continued to frame Greater China as earlier in the turnaround, with revenue declining in the quarter and additional weakness expected into the next period.

Still, the current picture is not a full turnaround, and NIKE did not provide a simple “stabilized” label for all footwear. The company said inventory management efforts remain a headwind to revenue and gross margin through parts of the calendar, and that sell-through and promotional intensity are not yet at target. Greater China remained a key risk, with NIKE expecting it to be down approximately 20% in the fourth quarter. What to watch next is whether margin expansion begins to show up in reported results as the “Win Now” actions are completed by the end of the calendar year, and whether running and football momentum translates into sustained full-price sell-through rather than temporary demand supported by markdown levels.