Growth slowdown! After hours, Nike, Inc. Class B (NKE.US) plunged 9%, the Iran conflict and the warning of a "20% drop" in China dealt a heavy blow to the recovery dream.

NIKE, Inc. Class B (NKE.US) stock price widened its decline in after-hours trading, as the company had unexpectedly projected a decrease in revenue for the current quarter, intensifying investor concerns that the Iran war could harm its recovery efforts. The financial report showed that NIKE, Inc. Class B had revenue of $11.3 billion for the third quarter ending on February 28, exceeding average expectations but remaining flat compared to the same period last year; earnings per share were $0.35, higher than the expected $0.28. Quarterly sales growth for NIKE, Inc. Class B is showing signs of recovery after a slump Chief Financial Officer Matt Friend stated in a post-earnings conference call that revenue is expected to decline by 2% to 4% in the fourth quarter of the fiscal year starting in March. This downtrend may persist throughout the calendar year, contrary to analysts' previous forecasts of at least a 2% increase in sales starting this quarter. As of writing, NIKE, Inc. Class B stock fell 8.9% in after-hours trading. As of Tuesday's close, the stock has already declined by 17% year-to-date. NIKE, Inc. Class B noted that high levels of inventory in Europe and the Middle East were due to promotional activities and transportation disruptions caused by the war. These negative factors, along with weakness in the Greater China region and other business areas, overshadowed the strong performance in North America. The management is dedicated to revitalizing NIKE, Inc. Class B's core business by increasing investment in sports like basketball and running. However, the urgency to reverse the decline in Greater China and Converse performance is growing, with the latter's sales decline exceeding expectations. CEO Elliott Hill reiterated that NIKE, Inc. Class B is working on a "country by country", "sport by sport" basis. Hill told analysts in the conference call, "It's a complicated body of work and some of the progress is slower than I'd like, but the direction is clear, the urgency is real and the foundation is getting stronger." Analyst Punam Goyal stated, "The war may impact Europe, the Middle East, and Africa (EMEA) region and have tariff effects on the gross margin," predicting this pressure will remain in the short term. The company's gross margin has contracted for the sixth consecutive quarter, dropping 130 basis points to 40.2%, mainly due to tariffs. Recent quarterly gross margin growth has slowed down Challenges include Greater China, where sales are expected to decline by about 20% this quarter. In China, due to operational errors and intense domestic competition, NIKE, Inc. Class B's third-quarter sales dropped by 10%. Friend mentioned in the analyst conference call after the earnings release that sales are expected to decline by 20% in the fourth quarter, citing rising oil prices and ongoing conflicts in the Middle East causing market volatility. Due to insufficient product categories, the company is struggling in its second-largest market, China (accounting for 15% of annual sales); meanwhile, a slower pace of innovation has led to local competitors like ANTA and LI NING eating into its market share. The Sportswear series was another point of concern last quarter, experiencing double-digit declines with high discount rates. Hill stated, "Restoring a healthy Sportswear business is crucial to our turnaround as it will continue to be a significant part of the market and a key part of our growth." NIKE, Inc. Class B is expected to release long-term performance guidance at its investor event in the fall. Friend stated that despite slight growth in North America, the company predicts a low single-digit decrease in annual revenue this year. This quarter's performance (covering most of the crucial holiday shopping period) showed continued rebound in wholesale revenue and the North American market. Friend told analysts in the conference call that NIKE, Inc. Class B is seeing growth in orders from wholesalers, and North American summer orders are strong as the retailer regains shelf space from competitors. He added that the Iran war has not yet affected consumer behaviors in North America.