What Management Said
Read the full Q2 2026 transcript ↗It's how athlete-centered innovation travels across and through every country and channel to drive growth. Our focus on sport by brand is the engine of our growth. Said another way, our growth will come from sport, athletes, product innovation, sport moments, and will be scaled through countries, channels, and accounts. The second theme is that we're building a healthier base for top-line growth.
We delivered 8% wholesale growth, elevated the experience in key Nike stores and Nike.com, and had fewer days of promotion. With North America, we're working with the most diverse wholesale landscape, which gives us several strategic partners to segment and differentiate our multi-brand, multi-sport, and multi-price point portfolio. This quarter, that approach led to over 20% wholesale growth in North America, with meaningful growth coming from existing partners. EMEA activated their sport offense on December 1st, so they just started rehiring these critically important revenue-generating roles in key countries.
Our second quarter results demonstrated the resilience of our portfolio, with modest year-over-year reported top-line growth despite managing headwinds from the actions we have taken to reposition our business. Wholesale has returned to growth, with a growing order book globally in both spring and summer. We highlighted last quarter that it will take more time to return to healthy growth in Greater China and Converse, and we expect headwinds to continue for the balance of the fiscal year. We have been navigating transitory headwinds to margin due to our Win Now Actions and shifts in the business, including product and channel mix and continued inventory liquidation.
What went well
- The Nike brand grew in the quarter with a strong mix, delivering 8% wholesale growth, fewer days of promotion, and revenue up 1% on a reported basis.
- North America Q2 revenue grew 9% with wholesale up 24%, driven by balanced contribution from both new and existing partners and momentum extending beyond running into basketball and training.
- Running grew over 20% and is taking market share, with new launches like Vomero Premium and Structure 26 delivering good sell-through.
- Excluding the approximately $550 million classic franchise headwind, currency-neutral revenue grew 6%, and inventory decreased 3% versus the prior year with units down high single digits.
- North America and EMEA, representing almost three-quarters of the business, returned to a healthy marketplace, and the World Cup football order book is up 40% versus World Cup 2022.
- Nike Direct made progress repositioning to a more premium experience with fewer promotion days, lower markdown rates, and increased full-price demand in North America.
What went wrong
- Gross margins declined 300 basis points to 40.6% due to higher tariff-driven product costs in North America and inventory obsolescence in Greater China that was not contemplated 90 days ago.
- Nike Direct was down 9% with Nike Digital declining 14% and Nike Stores down 3% as the channel continued to be repositioned.
- Greater China remained the weakest geography with a longer road ahead, as the company had become a lifestyle brand competing on price with an uncompelling, underinvested store fleet.
- Classic franchises declined over 20% versus the prior year, a top-line headwind of approximately $550 million.
- Sportswear is still in the early stages of diversification and was not growing, even as the classic franchises were right-sized.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Gross margin | Q3 FY2026 | Down 175-225 basis points, including 315 bps of higher tariff product costs (Expansion excluding tariffs, beginning recovery of transitory headwinds) |
| Tariff gross headwind | FY2026 | Approximately 320 bps gross, reduced to approximately 120 bps net (Consistent with prior quarter's net estimate) |
| Greater China and Converse trends | Q3 FY2026 | Relatively in line with Q2 (Continued reset actions) |
| North America revenue | Q3 FY2026 | Modest growth (Lapping value liquidation that fueled Q2 growth) |
| Wholesale revenue | FY2026 | Modest growth, order book up in spring and summer (Growing confidence in the dimensionality) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue | Up 1% reported, flat currency-neutral | Wholesale up 8% offsetting Nike Direct down 9%, with a $550 million classic franchise headwind |
| Gross margin | Down 300 bps to 40.6% | Higher tariff product costs in North America and unplanned Greater China inventory obsolescence |
| North America revenue | Up 9% (wholesale up 24%) | Win Now execution, balanced new and existing partner growth, and value-channel liquidation |
| Wholesale | Up 8% | Cleaned marketplace, stronger partner relationships, and a growing order book |
| Classic franchises | Down over 20% | Continued right-sizing, an approximately $550 million revenue headwind, on track to decline more than $4 billion from peak by year-end |
| Running | Up over 20% | Sport Offense execution and a relentless flow of innovative product, taking market share |
| Earnings per share | $0.53 | Reported result for the quarter |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Comeback stage | Turning the page / early innings | Middle innings of the comeback | Progressing |
| Classic franchise reduction | On track to decline from peak | On track to decline more than $4 billion from peak by fiscal year-end | Continuing |
| Greater China | Down 10% in Q1, longer road | Unplanned inventory obsolescence; reset requires fresh approach and new capabilities | Worsening near term, longest road ahead |
| Leadership structure | Geographies under intermediate layer | All geographies now report directly to Hill; Matt Friend leads sales and Nike Direct | Restructured |
| North America momentum | Up 4% in Q1 | Up 9% with wholesale up 24% | Accelerating |
| Tariffs | Approximately $1.5 billion, 120 bps net | Approximately 320 bps gross, 120 bps net FY2026 impact | Stable, still a significant near-term factor |
Q&A Summary
Where have you scored runs versus where is opportunity remaining, and can you elaborate on the gross margin components including underlying expansion excluding tariffs for Q3?
Hill said the Nike brand is growing, running is leading at over 20% and taking share, classics declined roughly $4 billion from peak, North America grew 9%, and the order book is up, while businesses move at different speeds with China having the longest road. Friend guided Q3 margins down 175-225 basis points including 315 bps of tariffs, expecting underlying expansion excluding tariffs that reflects the beginning of recovery of transitory headwinds.
When do you believe the 'recovery won't be linear' caveat will no longer be needed and you can hold momentum and create better visibility?
Hill said each brand, country, and city is at a different stage of the Sport Offense rollout that began in September, so it will take time across three brands, multiple sports, and four geos in 190 countries, pointing to North America as the proof point. Friend added growing confidence in sustaining North America momentum and modest wholesale growth, but noted unplanned China actions mean the company will continue taking it 90 days at a time.
Is there a timeline for the return to double-digit EBIT margin, and how deep a reset is necessary in China, and are we near a bottom there?
Hill said improving margins is a top priority with a clear path back to double-digit EBIT margins, pressured by intentional marketplace cleanup and tariffs. On China, he said Nike had become a lifestyle brand competing on price with an underinvested fleet, and is cleaning up aged product, getting back to retail basics, increasing Shanghai and Beijing investment, and working with partners Pou Sheng and Top Sports, but the reset will take time.
How do you see the phasing of growth across verticals beyond running, and are you happy with the North America partner mix or will you add distribution?
Hill cited Vomero Premium and Structure launches in running, global football as furthest along with three silos and a World Cup order book up 40% versus 2022, plus training, SKIMS, and basketball dimensionalizing through Sabrina, A'ja, Caitlin, and Ja. Friend said the back-half order book is balanced between new and existing partners and that the company wouldn't rule out new distribution but it isn't needed to sustain North America momentum.
Could the North America timeline of severe pressure followed by a return to growth serve as a playbook for China, and why not provide multi-year targets?
Hill said China has taken actions and Nike feels good about diagnosing what happened and what must be done, but it will take a fresh perspective, new capabilities, and work through partners, making an exact date difficult. Friend said the dynamic environment and complexity of turning around three brands across four geographies means the company will continue its 90-day practice and share longer-term insight as confidence grows.
What product is growing in North America enough to accelerate revenue beyond the classics reset, and where does operating overhead go with growing wholesale penetration?
Hill cited running, global football, training, SKIMS, basketball, and Jordan (including the AJ4 Black Cat, the largest Black Friday launch ever) as drivers, plus right-sized sportswear. Friend said wholesale growth creates meaningful leverage on supply chain and operating overhead, and while demand creation stays around 10% of revenue, the company will continue tightly managing operating overhead and share more in coming quarters.
More on NIKE, Inc.
Reported 2025-12-18 · figures from the NIKE, Inc. Q2 2026 earnings call.
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