VALUATION HIGHLIGHTS

1. Nike Brand Footwear constitutes 64% of the Trefis price estimate for NIKE's stock.
2. Nike Brand Apparel constitutes 28% of the Trefis price estimate for NIKE's stock.

WHAT HAS CHANGED?

Nike Q2 2026 Snapshot

Nike's Q2 revenue came in at about $12.4 billion, up roughly 1% year over year and modestly ahead of expectations, while EPS of $0.53 comfortably topped consensus. However, net income fell sharply, and gross margin slid to about 40.6%, pressured by higher tariffs, discounting, and an unfavorable mix. Operationally, wholesale rebounded with high single-digit growth, helping offset continued weakness in Nike Direct and digital, while Greater China remained a key drag with double-digit declines.

Note: Nike's FY'25 ended on May 31, 2025. Q2 FY'26 refers to the quarter that ended on November 30, 2025.

Impact of Tariffs

Higher tariff costs are hampering Nike's efforts to turn around its business. The company now expects tariffs to cost it $1.5 billion and hit its gross margin by 1.2 percentage points in its current fiscal year 2026. That's up from the $1 billion and 0.75 percentage point gross margin impact it projected in June.

Looking Ahead

Nike expects fiscal third quarter revenues to fall by a low single-digit percentage, with modest growth in North America. It also anticipates gross margins will drop 1.75 to 2.25 percentage points – including a 3.15 percentage point hit from tariffs.

Fiscal year '26 continues to be a year of taking action to rightsize the company's classics business, return Nike digital to a premium experience, diversify the product portfolio, deepen consumer connection, strengthen partner relationships, and realign teams and leadership.

The company also said it expects revenue and gross margin headwinds to continue throughout fiscal 2026 in both China and at Converse. Nike does not expect its direct business to return to growth in fiscal 2026. Nike also plans to launch a new footwear platform in January called Nike Mind, which aims to help athletes prepare for performance and competition.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Nike's value that present opportunities for upside or downside to the current Trefis price estimate for Nike:

• Nike Footwear Revenues: Nike Footwear Revenues have grown from $28 billion in FY'21 to $33.4 billion in FY'24, driven by strong marketing spend and innovation to enhance the product line. However, the metric declined by 12% in FY'25 to $29.4 billion. This was due to higher discounts and shifts in channel mix.
  Trefis expects this figure to increase to around $40 billion over the forecast period. If this metric increases to $45 billion by the end of our forecast period, there could be a 10% upside to the Trefis estimate. On the other hand, if it declines to around $36 billion, it represents a 5% downside to the Trefis estimate for Nike.


• Nike Brand Footwear Gross Profit Margin: Nike Gross Profit Margin declined from 45.9% in FY 2022 to 43.5% in FY 2023 due to higher product costs, markdowns, and unfavorable currency impacts. It rose to 44.5% in FY 2024 on strategic pricing and lower logistics costs, though lower NIKE Direct margins weighed on the figure. In FY 2025, gross margins fell again due to lower NIKE Brand average selling price, higher other costs, weaker Converse margins, and adverse currency effects.
  We expect the figure to decline in the near term and then increase slightly to stabilize at 43% by the end of our Trefis forecast period. In case the gross margin increases to 46% by the end of the Trefis forecast period, there can be a 5% upside to our price estimate for Nike's stock. On the other hand, if it declines to about 39%, there could be a 5% downside to the Trefis price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Nike at the top of the page.

BUSINESS SUMMARY

Nike specializes in designing, manufacturing, and marketing athletic footwear, apparel, and equipment. Its brands include Converse, Hurley, and Nike Golf, and its proprietary technologies include Nike Air, Zoom, and Flyknit. Nike typically outsources the manufacturing of its products to Asia and focuses on innovation and product design.

Recently, Nike has focused on product innovation and enhancing its digital engagement platforms. Its strategic emphasis has been on bolstering its brand strength and consumer connection - key competitive factors in a highly dynamic retail landscape.

SOURCES OF VALUE

The primary sources of Nike's value are footwear and apparel sold under the Nike brand, and together they contribute about 90% of Nike's value. Nike Brand Footwear is more valuable than Nike Brand Apparel and Converse Brand Footwear for the following reasons:

Nike Footwear is more valuable than Nike Apparel

Nike's footwear revenues stood at $29.4 billion in FY 2025, more than double that of its apparel revenues which were around $13 billion. As the economy improves in the U.S. and Europe, and demand increases in China and emerging markets, we expect footwear revenues to continue to rise. With aggressive marketing and innovation, Nike-branded footwear has been able to capture a significant chunk of the global sports footwear market.

KEY TRENDS

Demand for low-performance athletic wear is increasing

In recent years, consumer demand for low-performance footwear in the U.S. and Europe has grown significantly. Low-performance footwear, which is not designed for athletic use, has become a competitive battleground. NIKE has increased focus on this segment through its Converse and Hurley brands, but faces strong competition from low-cost manufacturers and global rivals like Adidas, Puma, New Balance, Skechers, and Under Armour, which could limit market share gains and pressure margins.

Growth of digital platform

Both the SNKRS app and the NIKE app remain central components of NIKE's digital strategy, with SNKRS driving demand for limited‑edition and collaboration products and the NIKE app supporting personalized engagement and loyalty. NIKE Direct, which includes owned stores and digital channels, accounted for a substantial portion(42%) of total brand revenue in FY 2025(down from 44% in FY'24), with digital experiences continuing to be a key focus of management's long‑term strategy.

FY 2025 saw a decline versus the prior year as digital traffic softened and NIKE Brand Digital sales faced headwinds. Management is prioritizing expansion of digital membership programs, enhanced personalization, and seamless omnichannel experiences to drive conversion and repeat purchases, even as broader macroeconomic and competitive pressures weigh on direct‑to‑consumer growth.

Nike is expanding its stores, which provide higher margins

By operating more of its own retail outlets, NIKE captures higher margins compared with selling through wholesale partners, as direct channels allow the company to retain a larger share of profit per unit sold. In the U.S, Nike's retail footprint has grown modestly, with total U.S. retail stores at approximately 369 in FY 2023, rising to around 377 in FY 2024, and slightly adjusting to 376 by FY 2025.

This expansion underscores NIKE's focus on strengthening direct‑to‑consumer sales and boosting profitability through higher‑margin owned store channels.