Nike exceeded earnings projections slightly with new CEO Elliott Hill at the helm, but concerns persist among investors regarding the potential impact of tariffs imposed by President Trump.

Following the release of its fiscal third quarter earnings after the market closed on Thursday, Nike saw its stock price drop by almost 8% at the opening of the market on Friday. Despite revenue of $11.27 billion, which outstripped estimates of $11.03 billion, it was still lower than the $12.43 billion reported in the previous year.

The company's adjusted earnings per share were $0.54, surpassing estimated earnings of $0.30, although falling short of last year's $0.98. This marks the second earnings report under the leadership of CEO Hill, who took the reins on October 14. Following the release of the fourth quarter guidance, the company's shares initially rose, then fell around 5% in after-hours trading.

CFO Matthew Friend expressed concerns about the potential repercussions of Trump's tariffs, particularly a 20% duty on all imports from China. As a result, the company anticipates a decline in gross margins for the fourth quarter by approximately 400 to 500 basis points due to restructuring charges and the impact of the tariffs.

Nike reported a gross margin of 41.5% in the fiscal third quarter, down from 44.8% in the same period last year. Friend emphasized the challenges posed by various external factors such as geopolitical tensions, tariff uncertainties, currency volatility, and tax regulations, as well as their impact on consumer confidence and macroeconomic indicators.

Looking ahead, the company projects that fourth quarter revenue will decrease by a percentage in the mid-teens, potentially at the lower end of the range. The company looks to regain its identity as a sports company amid challenges from competitors like On, Skechers, and Hoka, who have been gaining market share. Tariff-related concerns have also compounded inflation fears and shaken consumer sentiment, which plummeted notably in February.