Nike Shares Drop 10% On Falling China Sales

Nike reported strong quarterly earnings and revenue on Thursday, beating Wall Street expectations, thanks to good performance in North America. However, its shares dropped about 10% in after-hours trading due to weak sales in China and the ongoing impact of higher tariffs.

Q2 2026 Highlights

Earnings per share: 53 cents (expected 38 cents)
Revenue: $12.43 billion (expected $12.22 billion)
North America sales: Up 9% to $5.63 billion
China sales: Down 17% to $1.42 billion

CEO Elliott Hill is continuing his turnaround strategy, focusing on:

Clearing out old inventory
Investing in wholesale relationships
Improving Nike digital experience
Expanding and diversifying the product portfolio

Hill admitted that China’s market recovery is slower than expected, but emphasized that it remains one of Nike’s most important long-term opportunities.

Challenges Facing Nike:-

Gross margins fell 3 percentage points due to higher tariffs
Direct-to-consumer sales dropped 8%, while wholesale sales grew 8%
Converse brand sales dropped 30% in Q2
Leadership changes have been made to streamline operations and remove extra management layers

Areas of Strength and New Initiatives

Nike.com had its best Black Friday ever, partly driven by the Air Jordan “Black Cat” launchA new Nike Mind platform will launch in January to help athletes improve performanceNorth America continues to show strong growth, supporting overall revenue

Despite challenges in China and tariff pressures, Nike remains committed to long-term growth, digital expansion, and strengthening partnerships. Nike shares are down 13% this year, reflecting global market pressures.