01—Abstract
Summary
Summary of the 10-Q filed December 30, 2025. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc. reported a modest 1% increase in revenues for the second quarter of fiscal year 2026, reaching $12.4 billiona, with revenues remaining flat on a currency-neutral basis.
This period was marked by significant headwinds, particularly a substantial 300 basis point decline in gross margin to 40.6%b, primarily driven by new tariffs in North America impacting product costs. While wholesale revenues saw a healthy 8% increase, this was offset by an 8% decline in NIKE Direct revenues, largely due to reduced traffic on NIKE Brand Digital platforms. The company is actively implementing strategic initiatives, including product innovation, marketplace recalibration by repositioning NIKE Brand Digital as a full-price platform and reinvesting in wholesale distribution, alongside increased investment in demand creation.
These actions, while expected to negatively impact revenues and profitability in the near term, are intended to reignite brand momentum and drive long-term shareholder value. Notably, Greater China and Converse continue to face challenges, with negative impacts expected to persist throughout fiscal year 2026.
02—Key points
Key Highlights
- Revenues increased slightly by 1% to $12.4 billion for Q2 FY2026, flat on a currency-neutral basis.
- Gross margin declined significantly by 300 basis points to 40.6%, primarily due to higher tariffs in North America impacting product costs.
- NIKE Brand wholesale revenues grew by 8%, indicating strength in this channel.
- NIKE Direct revenues decreased by 8%, driven by an 14% drop in NIKE Brand Digital sales due to reduced traffic.
- Greater China and Converse segments continue to experience significant revenue declines and are expected to face headwinds throughout fiscal year 2026.
- The company returned approximately $598 million to shareholders through dividends in the quarter.
- Inventory levels increased by 3% to $7.7 billion, attributed to increased product costs including higher tariffs.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed December 30, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $12.43B$12.35B | +0.6% |
| Cost of Revenue | $7.38B$6.96B | +6.0% |
| Gross Profit | $5.04B$5.39B | −6.4% |
| SG&A Expenses | $4.04B$4.00B | +0.8% |
| Net Income | $792.00M$1.16B | −31.9% |
| EPS (Basic) | $0.54$0.78 | −30.8% |
| EPS (Diluted) | $0.53$0.78 | −32.1% |
| Shares Outstanding (Basic) | 1.48B1.49B | −0.5% |
| Shares Outstanding (Diluted) | 1.48B1.49B | −0.6% |
05—Questions
Frequently Asked Questions
What is the primary reason for the decrease in gross margin?
The primary reason for the decrease in gross margin by 300 basis points to 40.6% is attributed to higher NIKE Brand product costs, largely due to new tariffs in North America. Additionally, lower average selling prices (ASP) resulting from channel mix and increased discounts also contributed to the decline.
Why did NIKE Direct revenues decline?
NIKE Direct revenues decreased by 8% due to declines in both NIKE Brand Digital sales (down 14%) and NIKE store sales (down 3%). The primary driver for the digital decline was reduced traffic on the NIKE Brand Digital platforms.
What is the outlook for the Greater China and Converse segments?
Both the Greater China and Converse segments are facing significant challenges. Greater China is experiencing declining store traffic and elevated promotional activity, while Converse is undergoing a strategic brand and marketplace reset. The company expects negative impacts from these segments to continue throughout fiscal year 2026.
How is NIKE addressing the impact of new tariffs?
NIKE is taking actions to mitigate the impact of new tariffs, which are expected to result in a gross incremental cost of approximately $1.5 billion on an annualized basis. These actions include strategies related to product management (accelerating innovation, reducing supply of certain footwear), marketplace management (repositioning NIKE Brand Digital, reinvesting in wholesale, inventory liquidation through markdowns and discounts), and brand management (increasing investment in demand creation).
06—Continue