Nike exceeded modest earnings expectations under new CEO Elliott Hill, but investors are still on edge due to concerns about the impact of tariffs imposed by President Trump.

The company revealed its fiscal third-quarter earnings after the market closed on Thursday, reporting revenue of $11.27 billion. While this surpassed the estimated $11.03 billion, it was lower than the $12.43 billion revenue from the previous year.

Adjusted earnings per share were $0.54, higher than the estimated $0.30, but lower than last year's $0.98.

This earnings report marks the second under Hill's leadership, who assumed his role on October 14. Initially, Nike's shares rose but later dropped by around 5% in after-hours trading when the company shared its fourth-quarter guidance.

Nike's CFO, Matthew Friend, cautioned about the impact of Trump's tariffs, particularly the 20% duty on all goods imported from China. He mentioned that fourth-quarter gross margins were expected to decrease by approximately 400 to 500 basis points due to restructuring charges and the effects of the newly imposed tariffs.

The company's gross margins in the third quarter fell to 41.5%, missing the estimated 43%.

Friend acknowledged the challenges posed by external factors such as geopolitical uncertainties, new tariffs, and fluctuations in exchange rates, which could influence consumer confidence and overall market conditions.

Nike anticipates fourth-quarter revenue to decline within the mid-teens range compared to the previous year's $12.61 billion.

In conclusion, although Nike seems to have refocused on its core identity as a sports company under Hill's leadership, it faces tough competition from the likes of On Holding, Skechers, and Hoka sneakers. Furthermore, the company has been actively diversifying its manufacturing sources since the beginning of Trump's presidency to mitigate the impact of tariffs.