Nike stock today: Nike stock fell 10% today after earnings: Why tariffs and falling margins spooked NKE investors
Nike Stock (NKE) Today Slides More Than 10% After Gross Margins Fall for Second Consecutive Quarter
Nike stock fell more than 10% after the company said gross margins declined for a second straight quarter. For the three months ended November 30, gross margin dropped 300 basis points, and the company warned that margins are expected to fall another 175 to 225 basis points in the current quarter, as per a Reuters report.
Nike Earnings Beat Estimates Despite Profit Pressure
Despite the pressure, second-quarter revenue came in at $12.43 billion, topping analysts’ average estimate of $12.22 billion, as per LSEG data. Adjusted earnings per share were 53 cents, well above estimates of 38 cents, even as net income fell 32% from a year earlier.
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CEO Elliott Hill on Nike Results: ‘Nowhere Near Our Potential’
Chief executive Elliott Hill said results were “slightly better than we had anticipated 90 days ago” but “nowhere near our potential,” as quoted by Reuters.
Hill, who is completing his first year at the company, has been working to reposition Nike as a more sports-focused brand, cutting back some lifestyle product lines and increasing sales through wholesale partners. Those channels typically generate lower margins than Nike’s own stores, adding to profitability pressure.
Tariffs remain a major headwind. In September, Nike raised its expected tariff costs for the year to $1.5 billion. The company manufactures most of its footwear in countries such as Vietnam, Indonesia, and China, which have been affected by US import tariffs.ALSO READ: Stock market today: Why S&P 500, Dow rebounds after 4-day slump, Nasdaq jumps 1.38% – inflation eases and AI stocks rally, led by strong Micron earnings
Analysts Say Nike Recovery Is Costly
Analyst David Bartosiak of Zacks Investment Research said that, the results reminded “investors that this turnaround is still costing real money,” explaining that, “This was not a “clean” quarter. Nike showed resilience on the top line, but earnings power is under pressure as tariffs, restructuring, and a weaker direct channel collide,” as quoted by Reuters.
China and Converse Remain Key Weak Spots
China and Nike’s Converse brand continued to weigh on performance, with revenues falling in double digits for a second consecutive quarter. Company leadership cautioned that the recovery would take time, noting that the business remains in a transition phase facing both short-term and structural challenges.
CFO Warns Nike Transition Will Take Time
CFO Matthew Friend said that, “Our business is still in a transition in the middle innings, and we are navigating through both transitory and structural headwinds across the portfolio,” as quoted by Reuters.
Nike Revenue Outlook: Holiday Quarter Seen Lower
Looking ahead, Nike forecast third-quarter revenue, which includes the key December holiday period, to decline in the low-single digits, compared with analyst expectations of a 1.5% drop.
FAQs
How much did Nike’s gross margin fall?
Gross margin fell 300 basis points in the latest quarter.
Did Nike beat earnings expectations?
Yes, adjusted earnings per share beat estimates despite a sharp drop in net income.
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