NIKE, Inc. Q2 Fiscal 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: Up 1% year-over-year on a reported basis; flat on a currency-neutral basis.

NIKE Direct: Down 9%, with NIKE Digital declining 14% and NIKE stores down 3%.

Wholesale: Grew 8%, driven by a healthier mix despite a $550 million headwind from Classics franchises, which declined over 20%.

Gross Margin: Declined 300 basis points to 40.6%, impacted by increased product costs due to tariffs and inventory obsolescence in Greater China.

SG&A Expenses: Increased by 1% year-over-year, primarily due to higher brand marketing expenses.

Earnings Per Share: Reported at 53 cents.

Inventory: Decreased 3% year-over-year, with units down high single digits.

2Strategic Updates and Business Highlights

Leadership Changes: CEO Elliott Hill announced a restructuring where all geographies will report directly to him to accelerate decision-making and strategy implementation.

North America Performance: The region showed strong growth with over 20% wholesale growth, driven by effective partnerships and marketing strategies.

Product Innovations: Continued focus on diversifying the product portfolio, with successful launches in running, basketball, and football. New innovations like NIKE Mind and Aerofit are set to debut in early 2026.

Focus on China: Acknowledged as a long-term opportunity, but facing challenges that require a reset in strategy and operations.

3Forward Guidance and Outlook

Q3 Expectations: Anticipated low single-digit revenue decline, with modest growth in North America. Gross margin expected to decline by 175 to 225 basis points, factoring in tariff impacts.

Long-Term Goals: NIKE aims to return to double-digit EBIT margins, emphasizing the importance of growth, operational efficiency, and improved product mix.

4Bad News, Challenges, or Points of Concern

Greater China: Revenue declined 16%, with significant challenges in store traffic and high levels of aged inventory. The reset in strategy is necessary but will take time.

Tariff Impact: Increased product costs due to tariffs are a significant headwind, impacting gross margins and overall profitability.

Classics Franchise Decline: The ongoing decline of the Classics line is expected to continue affecting revenue, with a projected decline of over $4 billion by fiscal year-end.

5Notable Q&A Insights

Recovery Timeline: Elliott Hill indicated that the recovery will not be linear and varies by geography and brand. North America is leading the recovery, while China has a longer path ahead.

Margin Improvement: Matt Friend emphasized that while margins are under pressure, there is a clear path to recovery through growth and operational efficiency.

Wholesale Strategy: The company is satisfied with its current partner mix in North America and aims to maintain a balanced growth strategy between new and existing partners.

Investment in Demand Creation: NIKE plans to continue prioritizing demand creation investments, balancing it with cost management to ensure sustainable growth. Overall, NIKE is navigating a complex environment with a focus on strategic growth, product innovation, and operational efficiency, while addressing significant challenges in key markets like Greater China.