NIKE, Inc. beat Wall Street expectations in its fiscal Q2 2026, powered by strong North America wholesale momentum even as margins and profits came under pressure. Revenue landed at $12.4 billion, topping forecasts and growing 1% year over year on a reported basis, while diluted EPS of $0.53 beat analyst estimates despite falling sharply versus last year.
Revenue beats and EPS surprise
In fiscal Q2 2026, NIKE reported $12.4 billion in revenue, up 1% on a reported basis and flat on a currency-neutral basis, versus consensus expectations of around $12.2 billion. Earnings per share came in at $0.53, ahead of the roughly $0.37 forecast, representing an EPS beat of more than 40% even as earnings declined year over year.
Net income fell 32% to about $0.8 billion, reflecting margin pressure from higher product costs, tariffs, and a more promotional environment. Gross margin contracted by 300 basis points to 40.6%, weighing on profitability even as top-line results outperformed expectations.
North American momentum and channel shift
NIKE Brand revenues reached $12.1 billion, up 1%, driven primarily by growth in North America, partially offset by declines in Greater China and the APLA region. Wholesale was the standout: revenues climbed to $7.5 billion, up 8% on a reported and currency-neutral basis, fueled by stronger demand from key retail partners in North America.
By contrast, NIKE Direct—which includes owned stores and digital—declined to $4.6 billion, down 8% reported and 9% on a currency-neutral basis. The company cited a 14% drop in NIKE Brand Digital sales and a 3% decline in NIKE-owned stores, underscoring a strategic pivot back toward wholesale to drive reach and inventory efficiency.
Category and regional performance
Overall, NIKE revenues grew modestly, but the mix tells a more nuanced story. North America led recovery, benefiting from performance categories and key footwear and apparel franchises, while Greater China revenue declined in the mid-teens, pressured by weaker demand and inventory clean-up.
Analysts noted that performance and running categories showed renewed strength, while some classic footwear lines saw double-digit declines as the brand resets franchises and channels. This reflects NIKE’s broader “resurgence” strategy, which CEO Elliot Hill recently framed as a multi-quarter effort to restore sustainable growth and profitability.
Outlook and margin headwinds
Looking ahead, NIKE expects continued gross margin pressure in Q3, guiding to a decline of around 175–225 basis points as higher product costs and tariffs remain a drag. At the same time, the company plans to keep investing in demand creation and sports marketing, with SG&A forecast to grow at a low single-digit rate.
Despite the margin squeeze, management is leaning on North American wholesale momentum, product innovation, and tighter inventory to support a longer-term turnaround. The strong Q2 beat on both revenue and EPS gives NIKE more room to execute that plan, even as investors weigh near-term pressure in China and direct-to-consumer.
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