Nike beat expectations tonight. EPS of $0.35 against estimates of $0.28 — a 25% beat. Revenue of $11.28 billion came in ahead of the $11.24 billion forecast. North America grew for another quarter. And the stock barely moved.
That tells you something important about where Nike is right now. A beat isn't enough when investors are waiting for proof that the whole business is turning, not just parts of it.
Here's what happened.
The Numbers: A Genuine Beat
- Revenue: $11.28 billion — beat estimate of $11.24 billion, roughly flat year-on-year
- EPS: $0.35 — beat estimate of $0.28 by 25%, but down significantly year-on-year
- Net Income: $520 million — down 35% from $794 million a year ago
- Gross Margin: 40.2% — down 130 basis points, primarily due to tariffs
- North America Revenue: $5.03 billion — up 3%
- Greater China Revenue: Down year-on-year — but beat Wall Street estimates
- Wholesale Revenue: $6.5 billion — up 5%
- Direct Sales: $4.5 billion — down 4%
Translation: EPS stands for earnings per share — it's the company's total profit divided by the number of shares that exist. When Nike reports EPS of $0.35 vs expectations of $0.28, it means they made significantly more profit per share than analysts thought. That's a genuine beat. But "down significantly year-on-year" means they made less than they did in the same quarter last year. Both things are true simultaneously — they beat the lowered expectations while still being a weaker business than they were 12 months ago. Understanding that distinction is the key to reading any earnings report.
The North America Story: The Turnaround's Proof Point
The most important number in this report isn't EPS. It's North America wholesale revenue — up 5% to $6.5 billion.
When Elliott Hill returned as CEO in late 2024, the core diagnosis was clear: the previous management had damaged Nike's relationships with its wholesale partners — the sports retailers, department stores, and specialist shops that built the brand — in favour of selling directly through Nike's own website and stores. The thinking was that selling direct meant higher margins. The reality was that Nike lost shelf space, lost visibility, and left its retail partners cold.
Hill's "Win Now" strategy is simple: repair those relationships, get product back into the right stores, and let the brand do what it does best. Wholesale growing 5% while direct sales fall 4% is exactly the trade-off he's making deliberately. It's working in North America. It hasn't worked everywhere yet.
Translation: "Wholesale" means selling to retailers — JD Sports, Foot Locker, Sports Direct — who then sell to consumers. "Direct" means selling to consumers through Nike's own stores and website (Nike.com). Nike Direct was the big strategic push of the early 2020s — the theory being that cutting out the middleman meant more profit per shoe. It didn't work as well as hoped, because those wholesale partners also drove brand discovery and reach. Hill is rebuilding that two-sided model — premium direct sales plus strong wholesale presence. It takes time, and North America is the furthest along.
Like these translations?
Reading the full earnings report yourself? The Ask AYO extension highlights and translates the jargon in real time — so you can read any company's press release, 10-K filing, or investor call transcript and actually understand it. Free.
Get the free extensionChina: Still Declining, But Not Getting Worse
Greater China revenue fell again this quarter — but beat Wall Street's already-low expectations. That's a nuanced result. China isn't recovering yet, but the rate of deterioration appears to be stabilising.
One detail worth noting: Greater China EBIT actually increased 11% to $467 million despite revenue falling 7%. Nike is running China more profitably even as revenue declines — cutting costs and reducing promotions rather than chasing volume at any price. That's a deliberate choice, not a crisis.
The headwinds in China are real and layered. Consumer confidence is weak. Local Chinese brands like Anta and Li-Ning have taken meaningful market share in the performance category. Nike's digital channel in China has been particularly challenged. And the premium positioning that commands high prices in the West is harder to sustain in a market where domestic alternatives are genuinely competitive.
Translation: "Currency-neutral" is a phrase you'll hear a lot on Nike's calls. Because Nike sells globally in many different currencies — euros, yuan, pounds — a strong US dollar makes overseas revenue look smaller when converted back to dollars. "Currency-neutral" strips out that effect and shows how the underlying business is actually doing in local terms. It's a more honest view of whether people are actually buying more or fewer products, separate from exchange rate fluctuations.
The Tariff Problem
Nike's gross margin fell 1.3 percentage points to 40.2%. The company was direct about the cause: "primarily due to higher tariffs in North America."
Nike manufactures most of its products in Vietnam, Indonesia, and China — all countries facing significant US import tariffs. The annualised cost of those tariffs is approximately $1.5 billion. That's money coming straight out of profitability. Nike is working to mitigate it — adjusting product mix, shifting some production, passing some costs to consumers — but it's a headwind that won't disappear quickly.
The notable detail: excluding the tariff impact, Nike's gross margin would actually be expanding. The underlying business efficiency is improving. Tariffs are masking that progress.
Translation: Gross margin is the percentage of each sale Nike keeps after paying for the product itself — materials, manufacturing, shipping. When tariffs make it more expensive to import shoes into the US from Vietnam or Indonesia, that extra cost reduces the gross margin. Nike can respond in three ways: absorb the cost (lower margins), raise prices (risk losing customers), or move production to tariff-free countries (expensive and takes years). Most companies do some combination of all three. Nike is currently absorbing most of it, which is why margins are falling.
The Running Category: The Signal Everyone Should Watch
Nike's running shoes grew more than 20% in the prior quarter — and that momentum is continuing. The Pegasus and Vomero are back at the top of search demand charts. The Alphafly 4, launched in early 2025, has been well received by elite and serious amateur runners.
This matters more than it might seem. Running is the category Nike invented its reputation in. When On and Hoka started taking serious market share from around 2020 onwards, it was partly because Nike had deprioritised performance running in favour of lifestyle and fashion. Elliott Hill's explicit mission is to rebuild Nike as a sport brand first — and running is where that rebuilding shows up most clearly in the data.
A running category growing 20%+ while the overall business is roughly flat tells you the core product is resonating. The question is when that strength spreads to the rest of the business.
Translation: On Running and Hoka (owned by Deckers) are the two challenger brands that took significant market share from Nike in performance running over the past five years. Both built their reputations on genuine product innovation — On's cloud technology, Hoka's maximum cushioning — and tight communities of passionate runners. They didn't outspend Nike on marketing. They out-focused them. Hill's turnaround thesis is that Nike can win back this ground by doing what challengers do: get specific, get back to sport, and let product lead.
The World Cup Opportunity
One thing not in the numbers but very much in the conversation: the 2026 FIFA World Cup takes place in North America this summer. Nike is the kit supplier for the majority of the world's biggest football nations. The marketing opportunity is enormous — and unlike a typical product launch, it's a fixed event with a fixed date.
Nike unveiled its federation kits in March featuring new Aero-FIT cooling technology. The World Cup is the kind of cultural moment that Nike was built for — mass audience, elite athletes, global attention. If the turnaround is progressing by June, this is the moment that could accelerate it significantly.
The Bottom Line for Investors
Nike beat on EPS and revenue. North America is growing. Wholesale is recovering. The running category is showing genuine strength. And the World Cup is coming.
↑ Why This Matters (Bull Case)
The turnaround is working in the places it started first. North America wholesale growing 5% is exactly the signal Elliott Hill set out to create. EPS beating by 25% suggests operational discipline is improving. Running growing 20%+ means the core product is resonating. And the stock is at a nine-year low — if the turnaround fully materialises, the upside from here is significant. The World Cup is a catalyst that could shift brand perception at scale in the second half of 2026.
↓ Why This Might Worry You (Bear Case)
Net income is still down 35%. Gross margins are being eaten by tariffs with no quick fix in sight. China — a market that should be enormous for Nike — continues to decline. Direct sales are falling as wholesale grows, which means Nike is becoming more dependent on retail partners and less able to control its own pricing and presentation. The turnaround is real but it is not complete, and "not complete" at a stock price that already prices in significant recovery is a difficult position.
The question is whether Elliott Hill can convert North America momentum into a genuine global turnaround — or whether the beat tonight represents the ceiling of what's achievable while tariffs, China, and a weakened direct channel remain unresolved.
Read Next
References:
- Nike Inc — Q3 FY2026 Earnings Press Release (March 31, 2026)
- CNBC — Nike earnings beat estimates despite tariff hit and uneven recovery in China (March 31, 2026)
- Nike Investor Relations — Q3 FY26 Earnings Call Transcript (March 31, 2026)
Ticker: NKE (NYSE) · Reported: March 31, 2026
The biggest earnings, translated. Weekly.
One email a week covering what the brands you care about actually said — in plain English. No jargon, no fluff, no spam.
Unsubscribe anytime.