Nike results top estimates even as China sales drop 12%; retailer expects $986 million tariff refund

Nike on Tuesday posted quarterly earnings and revenue that topped Wall Street expectations, despite another sales decline in its key China market.

Shares of Nike dropped as much as 8% in extended trading Tuesday before making up much of the losses.

The company said its gross margin increased 8.9% during the quarter, largely due to an expected tariff refund of nearly $986 million after the Supreme Court struck down many of President Donald Trump's global duties. The tariff refunds contributed 52 cents to Nike's earnings per share for the quarter.

Company executives said on a call with analysts that as of the end of the quarter, Nike had collected over $300 million of cash related to its tariff refund claims.

Nike posted net income of $1.07 billion, or 72 cents per share, compared with $211 million, or 14 cents per share, a year earlier.

Revenue climbed to $10.97 billion, down 1% from $11.10 billion in the prior-year period.

Nike's revenue in North America, its largest market, climbed 3% to $4.83 billion. It fell short of analysts' expectations of $4.88 billion, according to StreetAccount.

Sales in Nike's Greater China market dropped 12% to $1.30 billion. Even so, the company beat Wall Street's expectations of $1.24 billion in revenue.

On a call with analysts, CEO Elliott Hill said the company is "fully committed to winning" the China market back.

"Overall, the results aren't there yet," Hill said. "We know we're not living up to our full potential, particularly in Nike sportswear and Jordan streetwear, where sell through remains challenged, impacting both current discounting and future order books."

For the full fiscal 2026, Nike reported net income of $3.11 billion, or $2.10 per share, compared with $3.22 billion, or $2.16 per share, in the prior year.

As the company looks ahead, it reiterated the guidance provided last fiscal quarter, expecting earnings to be "flattish" through the first two quarters of fiscal 2027, according to Friend. Nike also expects gross margin for the first fiscal quarter of 2027 to be slightly positive.