Nike Earnings Call: North America Shines, China Drags

Nike Inc ((NKE)) has held its Q2 earnings call. Read on for the main highlights of the call.

Nike’s Latest Earnings Call Balances Strong North America Momentum With China Headwinds

Nike’s latest earnings call painted a picture of cautious optimism: robust growth in North America and standout performance in the running category are offset by steep declines in Greater China and pressure on margins. Management stressed that new product innovations and improved inventory management are laying the groundwork for long-term growth, even as regional challenges and higher costs weigh on current profitability.

North America Powers Growth Across Key Sport Categories

North America was the clear bright spot, with revenue up 9% and wholesale surging 24%. The region saw strong momentum in running, basketball, and training, underscoring Nike’s continued brand strength in its home market. This performance helped cushion the impact of weaker results elsewhere and highlighted how important North America has become as the engine of the company’s near-term growth.

Running Segment Delivers Sustained Double-Digit Gains

The running segment remains one of Nike’s strongest growth drivers, posting over 20% growth for the second consecutive quarter. This strength was broad-based, with solid demand across all channels, including NIKE Direct. The sustained double-digit growth in running reinforces the success of Nike’s performance-focused strategy and validates investments in product innovation and storytelling in this category.

New Product Innovations Fuel Brand Heat

Nike highlighted several new product launches, including the NIKE Mind footwear platform and Aerofit technology, which were met with positive early reception. These innovations are central to Nike’s strategy to differentiate its product lineup, command pricing power, and keep consumers engaged. Management framed these launches as key to driving future growth across both performance and lifestyle segments, as retailers and consumers alike look for fresh, technical offerings.

Wholesale Channel Posts Solid, Broad-Based Growth

Wholesale revenue rose 8%, supported by balanced contributions from both new and existing partners. This marks a clear reaffirmation of Nike’s wholesale strategy after years of rebalancing between wholesale and direct channels. The company is leaning on strong retailer relationships to extend reach, improve assortment execution in stores, and capture demand in key categories such as running and basketball.

Inventory Management Shows Meaningful Improvement

Nike reported a 3% decrease in inventory, with particularly notable reductions in North America and EMEA. This points to healthier inventory levels and a cleaner marketplace, reducing the need for heavy discounting and helping protect brand equity. Better inventory discipline is especially important as the company navigates softer demand in some regions and works through product transitions tied to its latest innovations.

Greater China Remains a Significant Weak Spot

Greater China continues to be a major drag, with revenue down 16% and sharp declines in NIKE Digital (down 36%) and wholesale (down 15%). Management cited ongoing challenges around store traffic and market positioning, underscoring that the region is still in a reset phase. The performance in China contrasts sharply with North America’s strength and remains one of the biggest question marks for investors tracking Nike’s global growth story.

Gross Margin Compression Highlights Cost and Inventory Pressures

Gross margin fell 300 basis points to 40.6%, weighed down largely by higher product costs tied to tariffs and inventory obsolescence. These headwinds show that even with better inventory management, legacy stock and cost inflation are still pressuring profitability. The margin decline is a key concern for the market, especially as the company invests heavily in innovation and strategic initiatives.

NIKE Direct and Digital Channels Under Pressure

NIKE Direct revenue declined 9%, with NIKE Digital down 14%, signaling ongoing challenges in the direct-to-consumer strategy that has been a core growth pillar in recent years. Softer digital demand and a more cautious consumer backdrop are pressuring this high-margin channel, forcing Nike to rebalance its mix and rely more heavily on wholesale partners to drive volume.

APLA Softness Adds to International Challenges

The APLA region reported a 4% revenue decline, with mixed performance across countries, particularly in Asia Pacific. This adds another layer of international softness on top of the Greater China issues, highlighting that growth outside North America is uneven. Nike is facing varied consumer and macro environments across these markets, complicating its efforts to generate consistent global growth.

Guidance and Strategic Priorities Signal Confidence Despite Headwinds

Looking ahead, Nike is guiding to modest top-line growth, with revenues up 1% on a reported basis in the latest quarter and a targeted 8% increase in wholesale, including around 20% growth in running. Management is leaning into its “WinNow” actions and “sport offense” strategy, focused on expanding the running category, diversifying the product portfolio, and strengthening global partner relationships, with North America leading execution. While Greater China remains a challenge and margins are under pressure from tariffs and inventory-related costs, Nike reiterated its commitment to margin expansion and a return to double-digit EBIT margins over time through growth, operational efficiencies, and disciplined strategic investment.

In summary, Nike’s earnings call showcased a company with clear strengths but also visible vulnerabilities. North America and running are delivering impressive growth, supported by a strong innovation pipeline and improved inventory control. At the same time, Greater China weakness, digital softness, and margin pressures remain key risks. For investors, the story hinges on whether Nike can translate its product and wholesale momentum into broader international recovery and sustained margin improvement.