US' Nike Q2 FY26 revenue edges up despite sharp fall in direct sales

The wholesale revenues rose 8 per cent to $7.5 billion, driven largely by strength in North America. In contrast, Nike direct revenues declined 8 per cent to $4.6 billion on a reported basis and fell 9 per cent on a currency-neutral basis, reflecting weaker digital and owned-store sales.

The gross margin fell sharply by 300 basis points (bps) year on year (YoY) to 40.6 per cent, primarily due to higher tariffs in North America. Net income declined 32 per cent to $0.8 billion, while diluted earnings per share dropped 32 per cent to $0.53, Nike said in a press release.

By segment, Nike Brand revenues increased 1 per cent to $12.1 billion, supported by growth in North America, partially offset by declines in Greater China and Asia Pacific and Latin America (APLA). Nike direct revenues were impacted by a 14 per cent decline in Nike Brand Digital sales and a 3 per cent drop in Nike-owned stores. Converse revenues fell sharply by 30 per cent to $300 million, reflecting declines across all regions.

Selling and administrative expenses rose 1 per cent to $4.0 billion. Demand creation expenses increased 13 per cent to $1.3 billion, driven by higher brand and sports marketing spend, while operating overhead costs declined 4 per cent to $2.8 billion due to lower wage-related and administrative expenses. The effective tax rate rose to 20.7 per cent from 17.9 per cent a year earlier.

On the balance sheet, inventories stood at $7.7 billion, down 3 per cent YoY, reflecting lower unit levels partially offset by higher product costs linked to tariffs. Cash, cash equivalents and short-term investments declined by about $1.4 billion to $8.3 billion, as operating cash flow was offset by dividends, bond repayments, share buybacks and capital expenditure, added the release.

“Nike is in the middle innings of our comeback. We are making progress in the areas we prioritised first and remain confident in the actions we're taking to drive the long-term growth and profitability of our brands,” said Elliott Hill, president and chief executive officer (CEO) of Nike.

“FY26 continues to be a year of taking action through Win Now, including realigning our teams, strengthening partner relationships, rebalancing our portfolio, and winning on the ground. We're finding our rhythm in our new sport offence and setting ourselves up for the next phase of athlete-centered innovation in an elevated and integrated marketplace,” added Hill.

“In the second quarter, we demonstrated the resilience of our portfolio, delivering modest top-line reported growth while managing headwinds from repositioning our business in a dynamic operating environment,” he said. “We are making the shifts required to position our portfolio for a full recovery and driving real-time decisions in service of the long-term health of our brands,” said Matthew Friend, executive vice president and chief financial officer (CFO) of Nike.

For the first six months of FY26, Nike reported revenues of $24.1 billion, up 1 per cent YoY, while net income fell 31 per cent to $1.5 billion, underscoring the continued impact of margin pressures despite stable top-line performance.

ALCHEMPro News Desk (SG)