Nike Inc (NYSE:NKE) stock fell 9.64% (As on December 19, 11:24:03 AM UTC-4, Source: Google Finance) after the company reported better-than-expected fiscal second-quarter results as stronger sales in its North America business helped offset weakness in China at time when U.S. tariffs are raising input costs, eating into margins. Gross margin, however, decreased 300 basis points to 40.6%, driven by rising promotional activity to clear excess inventory, particularly in North America, and higher tariffs in North America. Net income was $0.8 billion, down 32 percent. Cash and equivalents and short-term investments were $8.3 billion, down approximately $1.4 billion, as cash generated by operations was more than offset by cash dividends, bond repayment, share repurchases and capital expenditures.

Moreover, NIKE Brand revenues were $12.1 billion, up 1 percent on a reported and currency-neutral basis, primarily due to growth in North America, partially offset by declines in Greater China and APLA. Wholesale revenues were $7.5 billion, up 8 percent on a reported and currency-neutral basis, primarily due to growth in North America. NIKE Direct revenues were $4.6 billion, down 8 percent on a reported basis and down 9 percent on a currency-neutral basis, due to a 14 percent decrease in NIKE Brand Digital and a 3 percent decrease in NIKE-owned stores. Revenues for Converse were $300 million, down 30 percent on a reported basis and down 31 percent on a currency-neutral basis, due to declines across all territories.

NKE in the second quarter of FY26 has reported the adjusted earnings per share of 53 cents, beating the analysts’ estimates for the adjusted earnings per share of 37 cents. The company had reported the adjusted revenue growth of 1 percent to $12.43 billion in the second quarter of FY26, beating the analysts’ estimates for revenue of $12.2 billion. The beat on revenue was supported by growth in North America, with sales up 9% to $5.6B in Q2 from a year earlier, beating analyst estimates of $5.9B. China, however, was a weak spot with sales down 17% to $1.42B, missing estimates of $1.6B. Inventories fell 3% to $7.7B. Demand creation expense was $1.3 billion, up 13 percent, primarily due to higher brand marketing expense and higher sports marketing expense. Operating overhead expense was $2.8 billion, down 4 percent, primarily due to lower wage-related expense and lower other administrative costs.

Additionally, in the second quarter, the Company returned approximately $598 million to shareholders through dividends, up 7 percent from the prior year.