Nike (NKE) Q2 2026 earnings

Nike’s Quarterly Earnings Exceed Expectations Despite China Sales Slump

Nike, the renowned athletic apparel retailer, has posted quarterly earnings and revenue that surpassed Wall Street’s estimates, driven by a strong performance in North America. However, the company’s stock slid approximately 10% in extended trading due to concerns over the significant decline in China sales and the ongoing impact of higher tariffs.

The company’s second fiscal quarter of 2026 saw earnings per share of 53 cents, exceeding the expected 38 cents, and revenue of $12.43 billion, surpassing the anticipated $12.22 billion. Sales in North America rose 9% to $5.63 billion, while revenue in the Greater China market dropped 17% to $1.42 billion. This decline in China sales has raised concerns among investors, despite the company’s overall positive performance.

Turnaround Strategy and Future Outlook

Nike’s CEO, Elliott Hill, has been implementing a turnaround strategy focused on regaining growth and market share, clearing out old inventory, and investing in wholesale relationships. Hill stated that the company is “in the middle inning of our comeback” and acknowledged that improvements in the China market are “not happening at the level or the pace we need to drive wider change.” Despite this, Hill remains optimistic about the long-term potential of the China market.

Nike expects fiscal third-quarter revenues to fall by a low single digit percentage, with modest growth in North America. The company also anticipates a decline in gross margins, partly due to a 3.15 percentage point hit from tariffs. Wholesale revenues climbed 8% to $7.5 billion during the quarter, while direct sales fell 8% to $4.6 billion. The company has been feeling the impact of tariff increases, with a 3 percentage point decrease in gross margin and a 3% drop in inventories.

Areas of Strength and New Initiatives

Despite the challenges, Nike has reported some areas of strength, including a record-breaking Black Friday performance on Nike.com, driven in part by the launch of the Air Jordan “Black Cat” collection. The company also plans to launch a new footwear platform called Nike Mind in January, aimed at helping athletes prepare for performance and competition. Additionally, Nike has undergone leadership changes to “remove layers” and better position itself for growth, including the departure of Chief Commercial Officer Craig Williams.

Nike’s stock has dropped over 13% this year, and the company faces ongoing challenges in the China market and from higher tariffs. However, with its strong performance in North America and new initiatives on the horizon, Nike remains a major player in the athletic apparel industry. As the company continues to navigate its turnaround strategy, investors will be watching closely to see how it addresses its challenges and capitalizes on its opportunities.