Nike (NKE) shares plummeted 5.25% on Thursday, March 20, 2025, following the release of its fiscal third-quarter earnings report and disappointing fourth-quarter guidance. Despite beating analyst expectations for Q3, the sportswear giant's outlook for the coming quarter raised concerns among investors about the company's ongoing turnaround efforts.

The company reported Q3 earnings per share of $0.54, surpassing the estimated $0.29. Revenue for the quarter came in at $11.27 billion, exceeding expectations of $11.01 billion. However, this still represented a 9% decline compared to the same period last year. Nike's gross margin faced pressure, dropping to 41.5% from 44.8% a year earlier, as the company continued to clear inventory through discounts.

The stock's sharp decline was primarily driven by Nike's gloomy forecast for its fiscal fourth quarter. Chief Financial Officer Matthew Friend stated that the company expects Q4 revenue to be down in the "mid-teens" range, which is worse than the 12% decline analysts had anticipated. Additionally, Nike projects Q4 gross margins to decline by about 400 to 500 basis points, signaling ongoing challenges in the company's turnaround strategy.

CEO Elliott Hill acknowledged the difficulties, stating, "While we met the expectations we set, we're not satisfied with our overall results." The company is grappling with inventory management issues, competitive pressures, and the need to refresh its product lineup. Nike's efforts to clean up inventory, strengthen relationships with key retailers, and introduce new products are taking longer than expected to yield positive results.

As Nike continues its turnaround efforts, investors will be closely watching how the company navigates these challenges in the coming quarters. The stark contrast between Nike's Q3 performance and its Q4 guidance highlights the ongoing hurdles the company faces as it works to regain market share and adapt to a highly competitive landscape.