Headwinds from reset expected to be worse in Q4 than Q3 as previously guided. Headwinds to continue in 1H26 NIKE (N/R) Q3 (3 mths to end Feb) beat consensus sales & earning expectations, though revenues were down 9% (down 7% CC) to $11.3bn (FactSet consensus $11bn) and EPS down 32% to 54c (consensus 30c). Direct revenue declined 12% (-10%CC), while Wholesale revenue fell 7% (-4%CC). North America revenues fell 4%, a sequential improvement on 2Q -8%, with NIKE Direct revenues down 10% and Wholesale revenues up 3%, due to favourable shipping timing and increased shipments to its value partners in 3Q. EMEA Q3 revenues fell 10% (-6%CC) with NIKE Direct down 12% & Wholesale down 3%. Q4 guidance very much in keeping with the views given at the end of 1H. Namely, Q4 performance will be impacted more than Q3 from the reset and ongoing clearance. NIKE Q4 revenues guided to be down in the mid-teens range, albeit at the low end, and includes several points of unfavourable shipment timing in North America and 2 points negative FX impact. Management has been clear headwinds will continue into 1H26 but should start to moderate from Q4. It confirmed the sort out of stock levels in Wholesale will run through its 1H ie to the end of CY25. With NIKE Direct, action has already started with the buy tightened from the end of last summer and going forward, surplus inventory will be pushed through the factory shops. More positive longer term ‘mood music’ for Wholesale partners like JD with a more integrated approach from NIKE Management said its 5 ‘Win Now’ actions were creating a better balance in the business and reigniting brand momentum after the first 90 days. NIKE continues to accelerate its product portfolio transition, leading with Sports Performance and right-sizing down its classic footwear franchises, with total units planned to be down double-digit in FY26. The most aggressive right-sizing action is on Dunk. The cleaning up of the marketplace will continue through Nike’s 1H26 (ie end of 2025) according to management. NIKE Digital’s buy is being tightening to support a full-price business model. For NIKE factory stores, markdowns will be increased to drive velocity of higher volumes of clearance inventory. In Wholesale, NIKE is taking some pain by investing in sales-related returns, reducing forward supply and providing higher wholesale discounts to liquidate aged inventory. More relevant to JD Sports and other Wholesale partners is the collaborative language NIKE is using and the emphasis that NIKE Direct and Wholesale channels have to be managed in an integrated approach. NIKE talked about ‘building growth plans together, creating distinct consumer positions and consumer right assortments, engaging way earlier in the process asking for product feedback, delivering our assortments at the right time, right place and at the right depth’. NIKE is investing in product engagement and commercial terms plus rebuilding the scale and capabilities of its sales organisation. Continued overleaf