Nike (NKE.US) shares plummeted 10.54% on December 19, 2025, closing at $58.71. The stock has declined 12.98% over the past five trading days, 9.16% in December, 22.41% year-to-date, and 23.85% over the past 52 weeks.
The footwear giant released its fiscal 2026 mid-year report on December 18, showing a year-over-year drop in net profit despite revenue and earnings surpassing market expectations. The decline was attributed to shrinking margins and ongoing pressure on its direct-to-consumer (DTC) business.
According to the earnings report, the Beaverton, Oregon-based company saw net profit fall 32% to $792 million from $1.16 billion in the same period last year. Diluted earnings per share dropped to $0.53 from $0.78, though this beat analysts' estimate of $0.38. Net sales edged up 1% to $12.43 billion from $12.35 billion a year earlier, slightly above the $12.22 billion consensus. On a constant-currency basis, sales were flat year-over-year.
By business segment, Nike brand revenue rose 1% to $12.1 billion in Q2, driven by North American performance but partially offset by declines in Greater China and the Asia Pacific & Latin America (APLA) regions. Challenges in China remained significant, with revenue in Greater China plunging 17% to $1.7 billion and EBIT shrinking 49%.
Nike's DTC revenue fell 8% to $4.6 billion, with digital sales down 14% and owned-store sales declining 3%. Meanwhile, wholesale channel revenue—which the company is rebuilding—grew 8% to $7.5 billion. Converse brand revenue crashed 30% to $300 million due to declines across all regions. Footwear revenue was flat at $7.7 billion, while apparel sales increased 4% to $3.9 billion.
Nike attributed the profit decline to U.S. tariff impacts and persistent weakness in China. The sportswear leader plans product launches around the 2026 Olympics, World Cup, and other major events. CEO Elliott Hill stated the company is in the "middle of our recovery journey."
Management maintained its full-year tariff impact estimate at $1.5 billion, unchanged from September's projection. GlobalData Managing Director Neil Saunders noted Nike is making progress but must replicate its running shoe success in other sports categories.
Saunders added that Nike still "lags in lifestyle and fashion trends," while China's weakness "reflects weaker cultural connectivity versus competitors." He concluded: "While we believe Nike is advancing, this quarter highlights how much work remains."
In recent years, Nike aggressively pursued its DTC strategy to reduce reliance on traditional wholesalers but encountered operational challenges. The company is now rebuilding wholesale partnerships while focusing on core sports and key cities. Investors await more substantial progress in other underperforming areas.
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