Nike delivered better‑than‑expected Q2 revenue yet saw a 300 bps drop in gross margin. Investors reacted negatively, citing pressure from discounting, tariffs, and weak China sales.
Nike reported Q2 revenue of $12.4 billion (€11.9bn), exceeding analyst expectations of approximately $12.2 billion (€11.7bn), driven primarily by strength in North America. Despite this beat, the company’s gross margin fell 300 basis points to 40.6 percent, impacted by heavy discounting to clear excess inventory and elevated import tariffs.
Investor reaction was muted to negative: the stock dropped around 2 percent in after-hours trading, with broader sentiment captured by a subsequent 3 percent decline in the following session. Shares were further pressured by renewed concerns over profitability and structural growth issues.
Nike’s Q2 performance highlighted regional disparities: North American sales rose 9 percent to $5.6 billion (€5.4bn), while the China market lagged, with revenues tumbling 17 percent to around $1.4 billion (€1.3bn). CEO Elliott Hill is steering the company through a strategic transformation, refocusing on core sport lines like running and basketball, renegotiating wholesale partnerships, and ramping up marketing – particularly ahead of product launches like the collaboration with Kim Kardashian’s SKIMS brand.
While inventories have begun to decline (down 3 percent to roughly $7.7 billion, €7.4 billion), the ongoing margin pressure from deeper discounts and tariffs remains a central challenge. Investor caution reflects uncertainty over Nike’s ability to balance top-line resilience with profitability restoration, especially amid stiff competition from emerging athletic wear brands.
A full report will be published later today by Sporting Goods Intelligence Europe, with a deeper financial breakdown.
