Nike (NKE) Q2 2026 Earnings Surprise: Revenue Beats Estimates, But China Weakness and Tariff Costs Pressure Margins

BEAVERTON, Ore. (Dec. 18, 2025) — Nike’s latest earnings report delivered a familiar split-screen for investors: a clear top-line surprise powered by North America, paired with profitability pressure from tariffs, promotions, and a still-soft China business.

For its fiscal 2026 second quarter (ended Nov. 30, 2025), Nike reported revenue of $12.43 billion, up 1% year over year (flat on a currency-neutral basis), while diluted EPS came in at $0.53. Both figures topped Wall Street expectations, yet net income fell 32% to $792 million and gross margin slid 300 basis points to 40.6%, helping explain why the stock dipped in after-hours trading even after the beat. ^[1]

The results arrive as CEO Elliott Hill continues a broad “Win Now” reset — re-centering Nike on core sport categories, rebuilding wholesale partnerships, and trying to restore momentum in key global markets at a time when shoppers are more selective and input costs remain a stubborn headwind. ^[2]

Nike earnings highlights: The numbers investors are focusing on

Nike’s Q2 report was strong on revenue and mixed on profitability:

Revenue:$12.43B, +1% YoY (flat currency-neutral) ^[3]
Nike Brand revenue:$12.124B, +1% YoY ^[4]
Wholesale revenue:$7.5B, +8% YoY ^[5]
Nike Direct revenue:$4.6B, -8% YoY (Nike Brand Digital -14%; Nike-owned stores -3%) ^[6]
Converse revenue:$300M, -30% YoY ^[7]
Gross margin:40.6%, down 300 bps (Nike cited higher tariffs in North America as a primary driver) ^[8]
Net income:$792M, -32% YoY; EPS:$0.53 ^[9]
Inventory:$7.7B, -3% YoY (units down, costs up, with tariff-related cost pressure noted) ^[10]

On the call and in prepared remarks, Hill framed the quarter as progress rather than a finish line, saying Nike is “in the middle innings” of its comeback. ^[11]

Revenue beat: North America offsets ongoing softness abroad

Nike’s report showed a business leaning heavily on North America’s resilience — while parts of the international picture remain choppy.

Regional performance (Nike Brand)

North America:$5.633B, +9% YoY ^[12]
Europe, Middle East & Africa (EMEA):$3.392B, +3% YoY ^[13]
Greater China:$1.423B, -17% YoY ^[14]
Asia Pacific & Latin America (APLA):$1.667B, -4% YoY ^[15]

In plain terms: Nike’s growth engine this quarter was North America, while Greater China remained the biggest drag. ^[16]

Reuters also pointed to resilient demand for running products and a stepped-up marketing push aimed at defending share against “upstart” competitors in the U.S. and elsewhere. ^[17]

The channel shift: Wholesale is rising again, while Nike Direct slows

One of the most important under-the-hood storylines in Nike’s Q2 earnings is where sales are happening.

Nike’s wholesale business grew 8%, while Nike Direct fell 8% — a stark reminder that Nike is still navigating the trade-offs of its distribution strategy. ^[18]

The company attributed the Nike Direct decline to:

a 14% drop in Nike Brand Digital, and
a 3% decline in Nike-owned stores. ^[19]

Strategically, Nike has been working to strengthen partner relationships and “win on the ground,” signaling renewed emphasis on wholesale and marketplace presence — even if that mix shift can weigh on margin versus higher-profit direct sales. ^[20]

Why Nike stock dipped after the beat: Profit and margins did the talking

Despite outperforming revenue and earnings expectations, investors quickly zeroed in on what didn’t improve:

Profit fell sharply: Nike’s net income dropped 32% year over year. ^[21]
Gross margin compressed: Nike’s gross margin fell 300 bps to 40.6%, with Nike citing higher tariffs in North America as a primary factor. ^[22]
China remained weak: Greater China revenue fell 17%, reinforcing that a full rebound is still a work in progress. ^[23]

In after-hours trading, Nike shares fell about 2% following the results, according to Reuters — a market response that underscores how sensitive investors remain to margin trajectory and signs of an international reacceleration. ^[24]

Margin pressure: Tariffs, promotions, and the cost of staying relevant

Nike’s margin story is not a single-variable equation. The company cited tariffs as a key driver of the quarter’s margin decline, and external coverage highlighted the additional strain from actions Nike is taking to reposition the business. ^[25]

On the spending side, Nike’s demand creation expense rose 13% to $1.3 billion, driven by higher brand and sports marketing. That’s a deliberate investment — but in the near term, it can compound profit pressure when margins are already under stress. ^[26]

At the same time, Nike trimmed operating overhead expense by 4% (to $2.8 billion), pointing to lower wage-related and administrative costs — a sign the company is trying to balance brand investment with cost discipline. ^[27]

Innovation and brand momentum: Nike bets on “newness” to drive the next phase

Beyond the quarter’s financials, Nike is working to rebuild its product pipeline and cultural relevance — the brand-level fuel that ultimately determines pricing power and full-price sell-through.

Reuters noted Nike has been investing in new initiatives, including:

a NikeSKIMS partnership with Kim Kardashian’s SKIMS brand, and
a motorized footwear system aimed at helping casual athletes and people with mobility challenges. ^[28]

Nike’s leadership has also emphasized a return to its sporting roots, with a renewed focus on categories such as running and basketball — segments where Nike historically dominates, and where competitive pressure has intensified. ^[29]

What Wall Street expected — and what Nike delivered instead

A key reason today’s report drew so much attention: Nike didn’t just beat — it beat a relatively cautious bar.

The Associated Press reported that analysts surveyed by Zacks were looking for about $0.37 EPS and roughly $12.14B in revenue; Nike posted $0.53 EPS and $12.43B revenue. ^[30]
Reuters cited an LSEG consensus revenue estimate near $12.22B, again below Nike’s reported $12.43B. ^[31]

That delta helps explain the “surprise” framing in much of the day’s coverage — but it also clarifies why the market response was muted: investors appear to be asking not whether Nike can beat a lowered bar, but whether it can sustain growth while rebuilding margins.

What’s next for Nike: Three signposts to watch after this earnings report

Nike’s Q2 results don’t close the book on the turnaround — they set up the next set of questions. Here are the signposts investors and industry watchers will likely track into the next quarter:

1) Can Nike stabilize Greater China?

A 17% decline is a large swing for one of Nike’s most strategically important regions. Even modest sequential improvement could change sentiment quickly — but continued declines would keep pressure on the long-term growth narrative. ^[32]

2) Does digital reaccelerate — or does the channel mix keep shifting?

With Nike Brand Digital down 14% and Nike Direct down 8%, the company needs to prove it can reignite demand without living on discounts — and without giving up too much margin to wholesale. ^[33]

3) Will gross margin start to recover as tariffs and promotions normalize?

Nike explicitly pointed to tariff-driven pressure in North America. The market will be watching for evidence that the worst of the margin compression is peaking — especially as Nike cycles through older inventory and pushes newer, higher-margin product. ^[34]

Bottom line

Nike’s Q2 fiscal 2026 earnings delivered the headline investors wanted — a revenue beat and a return to modest reported growth — but also highlighted why the turnaround remains a multi-quarter story.

North America demand and wholesale momentum helped Nike clear estimates, yet margin pressure, a slowing digital channel, and a sharp China decline kept enthusiasm in check. With the company investing more aggressively in marketing and innovation while managing tariff-driven cost headwinds, the next phase of the Nike comeback will likely hinge on whether it can turn today’s top-line resilience into sustained, profitable growth. ^[35]

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