The stock price of a well-known sportswear brand has collapsed!
Sportswear giant Nike... The company's stock price plummeted by more than 10%. If this downward trend continues after the market officially opens, the company's market value will evaporate by nearly $10 billion in a single day.
Nike 's latest financial report shows that in the second quarter of fiscal year 2026 (ending November 30), net profit plummeted by 32% year-on-year. The company also projects a revenue decline in the third quarter. This signifies a major setback after two consecutive quarters of revenue growth. Analysts suggest that Nike 's performance has failed to convince investors that its business is recovering.
Nike's stock price plummeted after the company released its financial report.
After the US stock market closed on Thursday, Nike released its financial report for the second quarter of fiscal year 2026 (ending November 30). The data showed that in the second quarter, the Beaverton, Oregon-based company's revenue was $12.427 billion, a year-over-year increase of 0.59%; net profit decreased by 32% year-over-year, from $1.163 billion in the same period last year to $792 million. Diluted earnings per share were 53 cents, compared to 78 cents in the same period last year.
Following the disclosure of the aforementioned financial report, Barclays bank The price target for Nike was lowered from $70 to $64. The company's stock price fell more than 10% in pre-market trading on Friday.
Nike attributed its second-quarter profit decline to the drag from increased U.S. tariffs and continued weakness in its China business. The sports giant plans to launch products during the 2026 Olympics, the World Cup, and other major sporting events, and CEO Elliott Hill stated that the company is "midway through its recovery." Hill noted that revenue growth in North America was a bright spot.
Nike reported second-quarter revenue of $12.1 billion, a 1% year-over-year increase. This growth was primarily driven by strong performance in North America, but was partially offset by declines in Greater China and the Asia Pacific and Latin America regions. In the same quarter, Nike's revenue in Greater China fell 17% year-over-year to $1.7 billion, with EBIT shrinking sharply by 49%. Converse's revenue was $300 million, a 30% year-over-year drop, mainly due to declining performance across all regions.
Nike CFO Matthew Friend stated that strong performance in North America and the running shoe product line were highlights of the second quarter, noting progress in the China business and the need for additional action to "break through the management cycle we've been experiencing." Friend indicated that the company's inventory situation in North America has improved compared to previous quarters where excess inventory squeezed profit margins.
However, tariffs remain a drag. Friend estimates the tariffs will have a $1.5 billion full-year impact, consistent with the company's September forecast. Neil Saunders, managing director of GlobalData, stated that Nike's performance shows some progress, but the company must find a way to replicate its success in running shoes across other sports.
Saunders stated that Nike remains "behind trends" in the casual and fashion sectors, while its weak performance in China "reflects the brand's inferior cultural connections compared to its competitors." He wrote in the report, "Overall, we believe Nike is making progress. However, this quarter's results highlight how much work still needs to be done."
Revenue is expected to decline in the third quarter.
During a conference call with company analysts, Nike CFO Friend stated that Nike expects a low single-digit decline in revenue for the third quarter of fiscal year 2026, while recording modest growth in North America. Nike warned that sales this quarter will decline due to continued weakness in its China business and ongoing pressure on its Converse brand.
This means that after two consecutive quarters of revenue growth, the company has encountered a setback. During the earnings call, CEO Hill stated that Nike's recovery "will not be a straight line, but we are taking decisive action to accelerate the recovery in lagging areas." The company noted declining store traffic in Greater China and challenges in clearing old inventory. Hill said, "The measures we have taken are just the beginning, but their extent or speed are not enough to drive broader change."
Nike is also trying to revive the Converse brand, which relies heavily on the Chuck Taylor line but struggles to gain momentum outside of it.
eToro analyst Farhan Badami stated that Nike's second-quarter results fell far short of convincing evidence of an improving business. Badami said that while sales grew by about 1%, both profits and profit margins declined, reflecting the company's increased price cuts and ongoing channel restructuring. He added that the recovery appears to be localized, with key categories such as basketball and sportswear yet to show sustained improvement. "The results highlight that there is still a lot of work to be done," Badami said.
It is understood that Nike has been vigorously promoting its "Direct-to-Consumer" (DTC) strategy in recent years to reduce its reliance on traditional wholesalers. However, it has encountered a series of difficulties in practice, leading the company to now need to re-emphasize and restore its relationships with wholesale partners. While Nike is now further focusing on key sports programs and core cities and working to repair relationships with retail partners, investors still hope to see greater progress from the company in other "problem areas."
"Nike's direct-to-consumer business and its performance in the Chinese market have been disappointing, and we need to hear more about when it will get back on track," said Punam Goyal, senior analyst at Bloomberg Intelligence. "Aside from that, the overall results are solid."
In 2024, Nike's stock performed second-worst among the 30 components of the Dow Jones Industrial Average, falling 30% for the year. From the beginning of 2025 to December 18, Nike's stock price had already fallen by 13%, while the S&P 500 index recorded a significant increase of 15.4% during the same period. As of Thursday's close, Nike's stock price was $65.63, with a total market capitalization of $97 billion.
(Source: Securities Times)
