NIKE (NYSE:NKE) announced third-quarter earnings that surpassed expectations, with enhanced margins and robust performance in its North America business contributing to its success.

In the quarter ending February 29, Nike achieved adjusted earnings of $0.98 per share and generated $12.43 billion in revenue, exceeding the expectations of analysts who had predicted earnings of $0.76 per share and $12.27 billion in revenue.

Sales in North America experienced an 18% increase compared to the same quarter last year, while sales in China, a crucial market for Nike, rose by 3%. This growth helped balance a 6% sales decrease in the Europe, Middle East, and Africa region.

The company’s gross margin saw a 150 basis point improvement, reaching 44.8%, attributed to increased prices and reduced costs for ocean freight and logistics.

Despite the positive results, shares dropped nearly 7% on Friday as the company warned of a revenue decline in the first half of 2025. The sportswear giant is reducing its franchise operations as part of a cost-saving measure. The company also recognized that its direct-to-consumer approach has not been as effective in driving growth as anticipated, and it is facing challenges in the running category, with emerging brands capturing a larger market share.

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