NIKE, Inc. Q2 FY2026 earnings call

• Thanked the NIKE team for their commitment and hard work during a busy holiday period. - Outlined FY2026 actions: rightsizing classics, returning NIKE Digital to premium, diversifying product portfolio, deepening consumer connections, etc. - Stated being in the middle innings of the comeback, with WinNow actions and sport offense as key drivers. - Discussed regional performance: North America leading, Greater China needing further reset, EMEA and APLA推进. - Highlighted product innovations in running, basketball, football, etc., and new product launches. - Emphasized margin improvement as a top priority, with work ongoing to drive profitable growth.

In the second quarter, revenues were up 1% on a reported basis and flat on a currency-neutral basis. NIKE Direct was down 9% with NIKE Digital declining 14% and NIKE stores down 3%. Wholesale grew 8%. The Classics franchises reduced revenues by approximately $550 million, down over 20% year-over-year. Currency-neutral revenue grew 6% excluding this headwind. Gross margins declined 300 basis points to 40.6% on a reported basis due to increased product costs from tariffs and inventory obsolescence in Greater China. SG&A was up 1% on a reported basis. Earnings per share was 53¢. Inventory decreased 3% year over year.

North America: Q2 revenue grew 9%, NIKE Direct declined 10%, NIKE Digital down 16%, NIKE stores down 2%, Wholesale grew 24%, EBIT declined 8%. EMEA: Q2 revenue down 1%, NIKE Direct declined 3%, NIKE Digital down 2%, NIKE stores down 5%, Wholesale flat, EBIT declined 12%. Greater China: Q2 revenue declined 16%, NIKE Direct down 18%, NIKE Digital down 36%, NIKE stores down 5%, Wholesale declined 15%, EBIT declined 49%. APLA: Q2 revenue down 4%, NIKE Direct declined 5%, NIKE Digital down 10%, NIKE stores up 1%, Wholesale down 3%, EBIT declined 15%.

• Q3 revenues expected to be down low single digits, with modest growth in North America, similar performance in Greater China and Converse to Q2, and a 3-point benefit from foreign exchange. - Q3 gross margin expected to be down approximately 175 to 225 basis points, but excluding the 315 basis point impact of higher tariffs, gross margin would expand. - Q3 SG&A dollars expected to be up low single digits due to higher demand creation and investments in sport offense. - Other expense net of interest income expected to be 0 to $10 million in Q3.

• Tariffs adding significant headwind to gross margin. - Greater China facing challenges like aged inventory, off-price sales, and lower profitability due to market cycle. - Uneven progress across geographies and product segments, with some regions like China having a longer road to recovery.

Q: Matthew Boss asked about where NIKE is in the turnaround phase and the components of gross margin.

A: Elliott Hill said the win now actions and sport offense are driving progress, with North America showing good results despite margin pressures. Matt Friend added that Q3 margins are affected by tariffs but expect expansion excluding tariffs.

Q: Ike Boruchow inquired about when the linear growth caveat won't be needed.

A: Elliott Hill said each brand, sport, and geography is at different stages, with North America leading but China having a longer road. Matt Friend mentioned operating in a dynamic environment and needing flexibility.

Q: Bob Drbul asked about the timeline for returning to double-digit margins and the depth of the reset in China.

A: Elliott Hill said margins are under pressure from win now actions and tariffs, with progress seen in North America. Matt Friend talked about growth driving margin expansion. Elliott Hill discussed China's reset needing a new approach and time.

Q: Aneesha Sherman asked about product growth phases and North America wholesale mix.

A: Elliott Hill said the team is diversifying the portfolio, with running and football showing progress. Matt Friend said North America has good partnerships and is focused on consumer-based strategies.

Q: Jonathan Komp asked about China's timeline and margin targets.

A: Elliott Hill said China needs a new approach and time, while Matt Friend emphasized operating in a dynamic environment and flexibility.

Q: Simeon Siegel asked about North America growth drivers and operating overhead.

A: Elliott Hill listed product categories driving North America growth. Matt Friend said growth creates cost leverage and they prioritize demand creation while managing costs.