Nike Falls After Earnings Beat as North America Strength Fails to Offset China

Nike Beats Estimates as North America Carries the Load

Nike cleared the earnings bar this quarter, but it wasn’t a clean win. The company topped expectations on both EPS and revenue, helped by a solid North America performance that effectively kept the quarter from looking far worse.

Earnings came in at $0.53 per share versus $0.38 expected, while revenue hit $12.43 billion, a touch above forecasts. Traders liked the headline beat, though the deeper read shows a business still working through a tough reset.

The initial reaction in the aftermarket trade was bearish with the stock trading $63.75, down $2.05 or -3.11%.

Is North America Doing Enough to Offset the Drag from China

North America was the bright spot again, with sales up 9% to $5.63 billion. Wholesale was the real engine — up 8% — signaling Nike’s push back toward partners is starting to gain traction. But the strength stops there. China revenue fell 17%, a sharper drop than many in the market were hoping for. That weakness continues to act as a very real cap on sentiment, even if investors give management some credit for calling this a multi-year rebuild. Traders aren’t ignoring the China miss, but for now they’re willing to lean on the idea that the North America consumer still shows up for the brand.

What Do the Margins and Spending Trends Tell Us

Margins were the soft spot. Gross margin fell 300 basis points to 40.6%, pressured by higher tariffs in North America. At the same time, demand creation expense jumped 13% as Nike continued to push marketing spend — a move that could pay off, though it weighs on near-term profitability. Net income dropped 32% year over year. The company is clearly choosing to reinvest while it works through mixed regional momentum, and traders may give some room for that, though patience won’t be unlimited.

Is Hill’s Turnaround Strategy Gaining Traction or Just Stabilizing the Story

CEO Elliott Hill repeated the message that Nike is in the “middle innings” of its comeback. Wholesale is improving, inventories are down 3%, and operating overhead expenses fell 4%. Those are the early signs traders look for when a reset is underway. But the market still wants proof that Nike Direct — down 8% — can re-accelerate. Digital weakness remains a sticking point, and until that improves, the stock may have trouble sustaining a strong bid.

What’s the Bottom Line for Traders

Nike beat expectations, but it didn’t silence the questions. North America is doing the heavy lifting, China remains a drag, and margins are still under pressure. The story isn’t broken — just not fully repaired. With management hosting its earnings call later today, traders will be listening for clearer signals on Direct-to-Consumer momentum, China stabilization, and whether tariff pressures ease into 2026. The smart money will want confirmation that this quarter wasn’t just a hold-steady moment, but a step forward in Nike’s recovery path.