Nike announced its second fiscal quarter earnings for 2026, surpassing Wall Street’s expectations despite a significant drop in sales in China. The company reported earnings per share of 53 cents, exceeding the anticipated 38 cents, and total revenue of $12.43 billion, higher than the expected $12.22 billion. A 9% increase in North American sales, amounting to $5.63 billion, helped mitigate the overall financial impact, although sales in Greater China fell by 17% to $1.42 billion.
In the context of CEO Elliott Hill’s ongoing turnaround strategy, he emphasized the need to refocus on growth, inventory management, and enhancing customer relations. Hill acknowledged that while the company is taking steps toward improvement, growth in China is not progressing as swiftly as hoped, yet he considers the region a vital long-term opportunity.
Looking ahead, Nike anticipates a low single-digit revenue decline for the fiscal third quarter, with North American growth remaining modest. Gross margins are expected to decrease by 1.75 to 2.25 percentage points, significantly influenced by tariff increases.
The company has also reported challenges with its Converse brand, with revenues declining by 30%. However, Nike highlighted successes such as record sales on Nike.com during Black Friday and plans to launch a new footwear platform, Nike Mind, in January, designed to support athletes’ performance.
Recent leadership changes aimed at streamlining operations were also noted, with Hill framing these adjustments as essential for fostering growth and improving market positioning. Despite facing a decline in share value of over 13% this year, Nike continues to strive for a comeback.
Bold Points:
- Why this story matters: Nike’s performance reflects broader trends in international markets and the impact of tariffs on global retail.
- Key takeaway: Strong North American sales cannot fully compensate for significant losses in the Chinese market, emphasizing the need for strategic focus.
- Opposing viewpoint: Some analysts may argue that Nike’s leadership changes and pivot from direct sales could fail to address underlying market weaknesses, particularly in international areas.
