Nike stock is getting hit hard today. Shares are down about 10% after the company flagged weak China sales and said tariffs hurt profits. The quarter showed only a small sales uptick. Investors are not buying it. They see margin pressure, and they want a faster fix. 📉
What rattled the stock
Nike’s second quarter came with mixed messages. Revenue inched higher, but the gains were uneven. China was the clear weak spot. Management also called out tariffs, which raised costs and squeezed margins. That one-two punch set off heavy selling at the open.
This move is about confidence. Investors expected clearer proof that the turnaround is taking hold. Instead, they saw slower growth in a key region and thinner profits. That is why the stock fell so fast.
The sell-off is about China and margins, not a collapse in global demand.
The China problem
China matters for Nike. It brings scale, high margins, and brand heat. When China slows, that mix turns against the company. Nike did not mince words. Sales in China fell sharply, and there was no firm timeline for a rebound.
There are three forces at work. First, consumer spending in China is uneven, especially for higher priced shoes and apparel. Second, local competitors are pressing harder on price and speed. Third, inventory and product flow remain choppy, which hurts full-price sell through.
How deep is the hit
Nike still has strong franchises in China. Jordan and running are sticky. But the company is not clearing hurdles fast enough. Stores need fresher assortments. Digital needs more energy around key drops. Wholesale partners need tighter allocations. Until those steps land, demand will lag.
If China stays weak into next year, earnings estimates will need to come down again.
Margins under pressure
Tariffs added friction this quarter. Higher import costs filter into cost of goods, and that trims gross margin. Nike offset some of it with price, mix, and supply chain savings. It was not enough. The result, lower profitability even with revenue growth.
Freight and input costs have eased from pandemic peaks. But tariffs and discounts work in the other direction. The company is also spending to fix the business. Marketing is up around core franchises. That is smart for brand health, but it weighs on near term profits.
What to watch next
- Gross margin guidance for the next two quarters
- Inventory levels and the rate of clearance activity
- China order trends from key wholesale partners
- Pace of new product launches in running and lifestyle
Can the turnaround work
Nike’s plan is straightforward. Simplify the product line. Focus on winners. Balance direct and wholesale. Speed up supply chains. Invest in design, materials, and digital experiences. These are the right moves. They tend to work, but they take time.
Early signs exist. Some key franchises are regaining momentum. Lead times are improving. Excess inventory is coming down. Still, the gap in China is large. The brand must rebuild heat and trust with local consumers. That means sharper pricing, more local stories, and better fits and silhouettes for the market.
The question is not whether the plan is right. The question is whether execution can offset macro drag and tariffs fast enough for Wall Street.
Focus on cash flow, inventory turns, and margin cadence. Those metrics will signal when the flywheel is turning.
Market view and investment take
Is the sell-off an overreaction, or a reset that still has room to run? Here is my read. The drop reflects real issues, not noise. China is soft. Tariffs are sticky. Margins are under pressure while spending rises. That justifies a lower multiple in the near term.
But the long term case is not broken. Nike still owns deep talent, scale, and a global brand. When product cycles hit, cash flow follows. The path back runs through cleaner inventory, faster drops, and stronger wholesale relationships. If management can show steady margin repair and even a modest China recovery, sentiment can turn quickly.
Short term traders will lean cautious. The tape will demand proof. Long term investors can start a position on weakness, but should expect volatility. Stagger entries. Watch guidance. If margins trough this quarter and improve next, the stock can find its footing.
Conclusion: this is painful, not fatal. The market punished Nike for slow progress on big problems. That is fair today. The prize is still there for patient money, if the company executes and China stabilizes.
