Nike Shares Tumble as China Struggles Outweigh Revenue Growth

2025-12-19 companies

Beaverton, Friday, 19 December 2025.
Nike surpassed earnings expectations, yet shares fell over 10% today. Investors focused on a sharp 17% revenue decline in Greater China, overshadowing a 9% sales rebound in North America.

Market Reaction and Regional Divergence

The market’s reaction on Friday, December 19, 2025, stood in stark contrast to the headline beats reported the previous evening. Nike posted fiscal second-quarter earnings of $0.53 per share, comfortably ahead of the $0.38 consensus estimate [1][7]. Revenue also topped expectations, coming in at $12.43 billion against the projected $12.22 billion [1]. However, these aggregate successes were insufficient to buoy investor sentiment, sending the stock down more than 10% in premarket trading [1]. The sell-off was primarily triggered by alarming data from Greater China, a critical growth engine, where revenue contracted by 17% to $1.42 billion for the quarter ended November 30, 2025 [1][2].

Profitability Pressures and Strategic Pivots

Despite the revenue growth in its home market, Nike’s bottom line faced significant headwinds. Net income dropped 32% to $792 million compared to the prior year [1][6]. Gross margins also deteriorated, falling 300 basis points to 40.6% [2]. The company attributed this compression largely to higher tariffs, which were projected in September to impact fiscal 2026 gross margins by approximately 1.2 percentage points [3]. Looking ahead, Nike anticipates gross margins will contract further by 1.75 to 2.25 percentage points in the third quarter [1].

Leadership Changes and Future Outlook

To accelerate decision-making, Nike has moved to streamline its corporate structure. Earlier in December, the company eliminated several executive layers, including the Chief Commercial Officer role [1][3]. However, challenges remain across the portfolio, with the Converse subsidiary continuing to struggle significantly, posting a 30% revenue decline to $300 million [2]. For the upcoming fiscal third quarter, Nike forecasts a low single-digit percentage decline in revenue, signaling that the path to recovery remains uneven as it prepares to launch its new “Nike Mind” footwear platform in January 2026 [1].

Sources

Retail China