Nike Reports $12.4 Billion As North America Strength Offsets China Slide

Nike has delivered an earnings beat but is heading into a tougher road ahead, as slowing demand in China and escalating US tariffs weigh on margins and investor confidence. The latest quarter shows that while top-line resilience is still there, profitability is getting squeezed just as the brand tries to reset its long-term growth story.

Nike reports $12.4 billion in revenue

In its fiscal 2026 second quarter, Nike reported revenue of about $12.4 billion, up roughly 1% year over year and slightly ahead of Wall Street expectations of just under $12.2 billion. Diluted earnings per share came in at $0.53, beating forecasts of around $0.38–$0.37 but still down about 32% versus the prior year.

Net income for the quarter was approximately $0.8 billion, also down around 32% year on year, reflecting ongoing pressure from higher costs and markdowns. For the next quarter, Nike now expects revenue to decline in the low single digits, rather than grow, signaling that the reset will take time.

China becomes the problem child

While overall sales inched higher, Greater China remains the weak spot in Nike’s global portfolio. Revenue in the region dropped about 17% in the quarter to roughly $1.42 billion, marking the sixth straight quarterly decline and sharply contrasting with growth in North America.

In North America, revenue rose around 9% to about $5.63 billion, helped by strong performance in running and a healthier inventory position. Executives on the earnings call said China is still one of the brand’s most important long-term opportunities but admitted the company needs to “reset” its marketplace strategy there and better tailor assortments, storytelling, and store formats to local consumers.

Tariffs slice into margins

Higher US tariffs are now a central storyline for Nike’s profitability. Gross margin in the quarter fell roughly 3 percentage points to about 40.6%, largely because of tariff-related product cost increases. Operating (EBIT) margin also deteriorated, coming in near 8.1%, as the brand absorbed both higher landed costs and ongoing investments in its turnaround.

Management has previously estimated that tariffs will have about a $1.5 billion impact and reduce full-year gross margin by roughly 120 basis points at the midpoint by fiscal 2026. For the upcoming quarter, Nike is guiding to a gross margin decline of around 200 basis points at the midpoint, again primarily due to tariffs.

Channel shift pains and product reset

The quarter also highlighted the mixed results of Nike’s consumer-direct push. Wholesale revenue grew about 8% to roughly $7.5 billion, while Nike Direct sales declined around 9%, including a sharper drop in digital. After several years of aggressively prioritizing direct-to-consumer, Nike is now leaning back into wholesale partners to regain shelf space and reach, especially as rivals like On and Adidas use those same partners to take share.

At the same time, management is pushing its “Sport Offense” strategy to refocus on performance, innovation, and key franchises in running, basketball, and lifestyle. The company acknowledged that earlier product cycles were not competitive enough and that the reset, especially in China, will require fresh assortments, better storytelling, and elevated retail experiences in cities like Shanghai and Beijing.

Market reaction and what’s next

Despite the earnings beat, investors focused on the weak outlook, China slowdown, and tariff drag. Nike shares fell roughly 10–11% after the report, extending a multi-year slide that has seen the stock lose about 34% over the last three years.

Analysts still see upside if Nike can stabilize China, manage tariffs, and reignite innovation, but they caution that the turnaround will be “non-linear” and margin recovery will be slower than the market once hoped. For now, the brand remains one of the most recognized names in global sportswear, yet it must prove it can convert that brand power into sustainable growth in a more competitive, more political retail landscape.