Nike shares slide as China sales drop 17% in sixth straight quarterly decline

Nike reported a second consecutive quarterly decline in gross margins, weighed down by weak sales in China, tariff pressures and costs related to its ongoing business turnaround. The results sent the sportswear maker’s shares down about 10%.

Sales in China fell 17%, marking the sixth straight quarter of decline in the key market. While Nike has previously said its recovery in China would lag North America, the prolonged downturn has tested investor patience.

Gross margin for the quarter ended November 30 fell by 300 basis points, and the company expects margins to decline a further 175 to 225 basis points in the current quarter. Net income dropped 32% year-on-year.

Tariffs remain a significant headwind. Nike’s Chief Financial Officer Matthew Friend said U.S. tariffs on Southeast Asian countries — where much of Nike’s manufacturing is based — are expected to cost the company $1.5 billion this year.

Chief Executive Officer Elliott Hill, who took over in 2024, said Nike is still in the “middle innings” of its recovery. The company is refocusing on core sports such as running and football, rebuilding relationships with wholesale partners and updating its product mix. However, these efforts have pressured margins in the short term due to heavier discounting and lower pricing through third-party retailers.

Despite the challenges, second-quarter revenue rose to $12.43 billion, beating analysts’ expectations. Nike said it expects revenue in the third quarter, which includes the holiday shopping season, to decline by low single digits.