03:28 PM EDT, 03/18/2025 (MT Newswires) -- Nike's ( NKE ) fiscal third-quarter sales will likely come in better than expected, though its bottom-line is expected to fall short of Wall Street's estimates amid margin pressures tied to promotional activity, Deutsche Bank said in a Tuesday note.

The athletic footwear and apparel maker is scheduled to release quarterly results on Thursday. The brokerage expects a year-over-year revenue decline of 10.6% versus market expectations for an 11% drop. Deutsche Bank anticipates earnings per share of $0.29, below the $0.32 consensus.

"We are encouraged by our (North America direct-to-consumer) promo tracker and expect a modest beat on the top-line, though forecast a slight EPS miss on (gross profit margin) pressure from higher promotional activity in wholesale," Deutsche Bank analyst Krisztina Katai wrote.

For the year-earlier third quarter, Nike ( NKE ) reported largely flat sales year over year of $12.43 billion.

The brokerage acknowledged that the stock remains under pressure amid broadly negative investor sentiment. Nike's ( NKE ) shares have slid nearly 27% over the last 12 months, compared with the S&P 500 rising about 11% over the period, Katai said.

During an earnings call in December, Nike ( NKE ) Chief Financial Officer Matthew Friend said third-quarter revenue was expected to be "down low double-digits," while gross margins were likely to decline roughly 300 to 350 basis points. The revenue outlook partly reflects "worsening foreign exchange headwinds, partially offset by a timing benefit from Cyber Week shifting into our third quarter," Friend said at the time.

The downward pressure on the stock may be attributable to greater-than-expected revenue and margin headwinds in fiscal 2026, a "longer negative EPS revision cycle" and soft traffic trends stemming from slowing discretionary spending, Deutsche Bank's Katai said.

"While we acknowledge the concerns, we walk into (the third quarter) cautiously optimistic that shares have bottomed," the analyst said. "Furthermore, our channel checks revealed several green shoots emerging with what appears to be strong consumer interest in recent running shoe launches, suggesting that (Nike ( NKE )) could be on its way to regain market share in the running segment of the market."

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