Should Nike’s Margin Squeeze and China Softness in Q2 2026 Shape NKE’s Turnaround Narrative?

• Nike has now reported fiscal 2026 second-quarter results, with sales edging up to US$12,427 million while net income fell to US$792 million, compressing both basic and diluted earnings per share versus a year ago.
• The figures highlight a company in transition: resilient top-line performance supported by North America contrasts with shrinking profit margins and ongoing weakness in Greater China amid higher tariffs and inventory clearance efforts.
• We’ll now examine how Nike’s margin pressure and China softness intersect with its existing turnaround narrative and outlook on inventory cleanup.

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NIKE Investment Narrative Recap

To own Nike today, you have to believe its brand strength and product innovation can outlast a messy transition period marked by margin pressure and mixed regional trends. The latest quarter supports that tension: sales inched higher to US$12,427 million and topped expectations, yet net income fell to US$792 million as tariffs, promotions and a 17% drop in Greater China sales weighed on profits. Management now frames fiscal 2026 as a reset year, which keeps margin recovery the key near term catalyst and China execution the biggest risk.

Against this backdrop, Nike’s recent leadership reshuffle, including the creation of a new COO role overseeing end to end operations, looks especially relevant. With gross margin under strain from discounting and higher costs, investors are watching whether tighter operational control and cleaner inventories can support the company’s “Win Now” turnaround efforts and eventually ease some of the earnings pressure revealed in the latest results.

Yet beneath the resilient revenue, investors should be aware of how persistent margin pressure from discounting and tariffs could...

Read the full narrative on NIKE (it's free!)

NIKE’s narrative projects $50.7 billion revenue and $4.4 billion earnings by 2028. This requires 3.1% yearly revenue growth and an earnings increase of about $1.2 billion from $3.2 billion today.

Uncover how NIKE's forecasts yield a $83.30 fair value, a 27% upside to its current price.

Exploring Other Perspectives

Forty fair value estimates from the Simply Wall St Community span roughly US$58 to US$97 per share, underscoring how far apart individual views can be. When you set those against Nike’s ongoing margin compression from tariffs and promotions, it highlights why examining several perspectives on the company’s earnings path really matters.

Explore 40 other fair value estimates on NIKE - why the stock might be worth as much as 47% more than the current price!

Build Your Own NIKE Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your NIKE research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free NIKE research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate NIKE's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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