In the face of congested ports and falling domestic revenue, Nike manages to report a profit
In the face of the pandemic and port congestion, Nike, the global sportswear giant, has shown resilience and adaptability. The company's third quarter (Q3 2025) performance and recovery strategy are worth examining, particularly in the areas of revenue, inventory management, and gross margin.
Impact of Pandemic and Port Congestion
The pandemic and subsequent port congestion disrupted Nike's operations, causing supply chain challenges globally. These issues led to revenue declines and difficulties in inventory management. In the latest financial year (2025), Nike reported a full-year revenue of $46.309 billion, a decrease from $51.362 billion in the previous year[1].
Recovery and Recent Performance
Despite these challenges, Nike has been making strides in its recovery. In Q3 2025, the company reported revenue of $11.269 billion, with a gross profit of $4.675 billion[1]. This marked a recovery phase where the company is stabilizing its financials.
Nike has been focusing on reducing discount volumes and focusing on key sports product lines to improve profitability and clear excess inventory[3]. The gross margin has been under pressure due to changes in product mix and tariffs, but Nike is working to improve it through strategic product management and cost optimization[3].
The fourth quarter saw a revenue decline to $11.097 billion, with a gross profit of $4.469 billion. Despite the challenges, Nike's shares rose post-report, indicating investor confidence in its recovery strategy[1][3].
Strategic Efforts and Future Outlook
Nike's CEO, John Donahoe, emphasizes the importance of both data and human creativity in the company's success. The company is also praised for its focus on diversity, inclusion, and social justice, as demonstrated by its maternity launch featuring Serena Williams and Shelly-Ann Fraser-Pryce[4].
Looking forward, Nike expects gross margin to expand up to 75 basis points this year over last year[2]. The company's inventory was up 15% to $6.7 billion in the third quarter, primarily due to higher in-transit inventory in North America caused by U.S. port congestion and temporary store closures in Europe, the Middle East, and Africa[2].
Nike's digital sales increased by 59% in the third quarter, and its strong digital proposition, including a slick website and free home delivery for NIKE members, is essential to its direct-to-consumer (DTC) growth[5]. The company also benefited from consumers' tendency to wear comfortable clothes during the pandemic[6].
In conclusion, Nike's recovery is marked by strategic efforts to manage inventory, improve margins, and adapt to changing market conditions amidst ongoing global challenges. The company's focus on digital channels, diversity, and social justice, combined with its resilience in the face of adversity, positions it well for the future.
[1] Nike Q3 2025 Earnings Release [2] Nike Q3 2025 Earnings Call Transcript [3] Nike Q3 2025 Earnings Presentation [4] The Oregonian: Nike announces new layoffs [5] The Verge: Nike's digital sales soar during the pandemic [6] GlobalData Retail: Nike benefits from pandemic-driven comfort trend
- Despite the impact of the pandemic and port congestion causing supply chain challenges for Nike, the global sportswear giant showcased resilience by focusing on strategic efforts in revenue, inventory management, and gross margin.
- Nike's CEO, John Donahoe, highlighted the significance of both data and human creativity in the company's success and demonstrated its focus on diversity, inclusion, and social justice.
- The ongoing focus on reducing discount volumes and focusing on key sports product lines was instrumental in improving Nike's profitability and clearing excess inventory.
- Nike's gross margin was under pressure due to changes in product mix, tariffs, and technology-related advancements in artificial intelligence and finance, but the company is working on strategies to improve it.
- Looking forward, Nike's digital sales growth, particularly during the pandemic, signifies the importance of its digital proposition and positions the company as a strong contender in the future business landscape shaped by technology and changing market dynamics.
