In Q2 fiscal 2026, Nike’s revenues in Greater China fell by 17%, driven by softer consumer spending on athletic footwear and apparel in lower-tier cities and aggressive price promotions by domestic brands. This decline followed a 12% rise in the prior quarter, suggesting that China’s structural headwinds have proven more persistent than anticipated. Management attributed the drop to weakened foot traffic in key urban malls and continued inventory overhang at major wholesale partners. Despite these challenges, Nike reported a 5% increase in digital sales in the region, reflecting ongoing strength in its online ecosystem and localized marketing campaigns.

Nike’s gross margin for Q2 fiscal 2026 narrowed by 130 basis points year-over-year, settling at 44.2%, as the company absorbed higher freight costs and stepped up discounting to clear excess inventory. Operating margins slipped to 11.5%, down from 13.1% in the same period last year, reflecting elevated marketing spend in Europe and North America to support new product launches. These margin pressures have tempered investor enthusiasm, particularly given that Nike currently trades at a premium multiple relative to its closest peer group, despite posting lower revenue growth of 3% on a consolidated basis. Analysts are now assessing whether ongoing cost optimization initiatives and a streamlined supply chain can restore profitability in the back half of the fiscal year.