01—Abstract
Summary
Summary of the 8-K filed December 18, 2025. Cited figures are marked; the original filing is the authoritative source.
NIKE reported fiscal 2026 second-quarter results (quarter ended November 30, 2025) that showed top-line stability but a sharp drop in profitability.
Revenue was $12.4 billiona, up 1% on a reported basis and flat on a currency-neutral basis. Wholesale grew 8%, led by North America, while NIKE Direct fell 8% (NIKE Brand Digital down 14%, NIKE-owned stores down 3%). Converse revenue declined 30% to $300 million, and Greater China fell 17% reported (16% currency-neutral).
Profitability weakened considerably. Gross margin fell 300 basis points to 40.6%, which management attributed primarily to higher tariffs in North America. Demand creation expense rose 13% to $1.3 billionb, while operating overhead fell 4%, leaving total selling and administrative expense up 1%.
Net income declined 32% to $792 millionc, and diluted EPS fell 32% to $0.53. EBIT margin compressed to 8.0% from 11.3%, and the effective tax rate rose to 20.7% from 17.9%. On the balance sheet, inventories declined 3% to $7.7 billion, and cash plus short-term investments fell about $1.4 billion to $8.3 billion, reflecting dividends, a bond repayment, share repurchases, and capital expenditures that exceeded operating cash generation.
NIKE returned about $598 milliond to shareholders via dividends (up 7%) and extended its streak to 24 consecutive years of dividend increases. Management described the company as being in the middle innings of a turnaround under its Win Now strategy. Note that this is an earnings release furnished under Item 2.02, not a filed disclosure of a material event.
02—Key points
Key Highlights
- Revenue of $12.4 billion rose 1% reported but was flat on a currency-neutral basis, indicating limited underlying growth.
- Gross margin declined 300 basis points to 40.6%, primarily due to higher tariffs in North America.
- Diluted EPS fell 32% to $0.53 and net income fell 32% to $792 million as EBIT margin dropped to 8.0% from 11.3%.
- Wholesale revenue grew 8% to $7.5 billion, while NIKE Direct declined 8%, with NIKE Brand Digital down 14%.
- Greater China revenue fell 17% (16% currency-neutral) and its EBIT dropped 49%, a key area of weakness.
- Converse revenue fell 30% to $300 million, with declines across all territories.
- Inventories fell 3% to $7.7 billion, and cash plus short-term investments declined about $1.4 billion to $8.3 billion; dividends of $0.41 per share were maintained with a 24-year streak of increases intact.
03—Questions
Frequently Asked Questions
What drove the decline in NIKE's profitability this quarter?
The main driver was gross margin compression, which fell 300 basis points to 40.6%, primarily due to higher tariffs in North America. Demand creation spending rose 13%, while operating overhead fell 4%, partly offsetting the gross margin pressure. Together these pushed net income down 32% and EBIT margin down to 8.0% from 11.3%.
Is NIKE's revenue growing?
Modestly on a reported basis. Total revenue rose 1% to $12.4 billion, but it was flat on a currency-neutral basis. Growth was concentrated in wholesale (up 8%) and North America (up 9%), while NIKE Direct (down 8%), Greater China (down 17%), and Converse (down 30%) declined.
How is NIKE managing its cash and shareholder returns?
Cash and short-term investments fell about $1.4 billion to $8.3 billion, as operating cash flow was more than offset by dividends, a bond repayment, share repurchases, and capital expenditures. NIKE returned about $598 million through dividends in the quarter, up 7% year over year, and continued its 24-year record of dividend increases. Inventories declined 3% to $7.7 billion.
What is management's outlook or message to investors?
The release contained no formal numerical guidance. CEO Elliott Hill said NIKE is in the middle innings of its comeback and described the Win Now strategy, which includes realigning teams, strengthening partner relationships, rebalancing the portfolio, and winning on the ground. CFO Matthew Friend said the company is making the shifts needed for a full recovery while managing headwinds from repositioning the business.
Is this filing a formal disclosure of a material event?
Not in itself. The 8-K was filed under Item 2.02 (Results of Operations and Financial Condition) and furnishes the earnings press release as Exhibit 99.1. Information furnished under Item 2.02 is not treated as filed for purposes of Section 18 of the Exchange Act, so the filing mainly makes the quarterly results publicly available.
04—Continue