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.
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. Nike Investors+1
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)
- Nike Brand revenue:$12.124B, +1% YoY
- Wholesale revenue:$7.5B, +8% YoY
- Nike Direct revenue:$4.6B, -8% YoY (Nike Brand Digital -14%; Nike-owned stores -3%)
- Converse revenue:$300M, -30% YoY
- Gross margin:40.6%, down 300 bps (Nike cited higher tariffs in North America as a primary driver)
- Net income:$792M, -32% YoY; EPS:$0.53
- Inventory:$7.7B, -3% YoY (units down, costs up, with tariff-related cost pressure noted)
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. Nike Investors
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
- Europe, Middle East & Africa (EMEA):$3.392B, +3% YoY
- Greater China:$1.423B, -17% YoY
- Asia Pacific & Latin America (APLA):$1.667B, -4% YoY
In plain terms: Nike’s growth engine this quarter was North America, while Greater China remained the biggest drag.
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. Reuters
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.
The company attributed the Nike Direct decline to:
- a 14% drop in Nike Brand Digital, and
- a 3% decline in Nike-owned stores.
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. Nike Investors+1
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.
- 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.
- China remained weak: Greater China revenue fell 17%, reinforcing that a full rebound is still a work in progress.
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.
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.
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.
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.
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.
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.
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.
- Reuters cited an LSEG consensus revenue estimate near $12.22B, again below Nike’s reported $12.43B.
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.
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.
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.
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.
