Nike’s Struggles Continue, but Turnaround Plan May Be Working – The New York Times

In a quarterly report filed Dec. 18, 2025 covering the period through Nov. 30, Nike said sales rose 1 percent even as net income plunged 32 percent. The company cited a sharp contraction in Greater China — mainland China, Hong Kong and Taiwan — where revenue fell 17 percent, and continued weakness at its Converse label, which saw sales decline about 30 percent. Management pointed to a North America recovery and early benefits from a broad restructuring and product reset, while warning tariffs and China remain material headwinds. Nike forecast global revenue to decline in the low single digits in the current quarter, even as North America is expected to grow.

• Nike reported a 1% increase in quarterly sales for the period ended Nov. 30, 2025, with net income down roughly 32% year-over-year.
• Revenue in mainland China, Hong Kong and Taiwan fell 17% in the quarter, a primary drag on overall results.
• Converse sales declined about 30% across regions, prompting a product reset focused on the Chuck Taylor line.
• Nike expects global revenue to fall in the low single digits for the current fiscal quarter while forecasting growth in North America.
• The company said tariffs will add roughly $1.5 billion to costs in the current fiscal year and will depress gross margin.
• CEO Elliott Hill, who returned from retirement to lead the company last year, has reorganized the corporate structure and replaced several senior executives.
• Management cited inventory clean-up and renewed investment in performance product development, especially running shoes, as central to the turnaround.

Background

Nike’s recent struggles are rooted in strategic shifts earlier in the decade, when the company emphasized lifestyle and fashion-driven lines at the expense of core performance categories such as running. That pivot gained share in some consumer segments but ceded ground in performance footwear and athletics, prompting a multi-quarter sales slump and a loss of market momentum. The company also faced shifting consumer preferences in China and intensified competition from local and global rivals.

Leadership changes came as part of the response. Elliott Hill returned from retirement last year to take the chief executive role, initiating a corporate reorganization and replacing many senior executives to accelerate product development and speed decision-making. Nike has been working through excess inventory accumulated during the slowdown and has prioritized investment in key cities and wholesale relationships, particularly in Beijing and Shanghai as part of its China reset. Executives previously told investors that a China turnaround would require time and targeted investment.

Main Event

On Dec. 18, 2025 Nike reported modest top-line growth but a steep drop in profitability for the quarter ended Nov. 30. North America was the bright spot, sustaining sales growth that management said reflects progress on product and marketing initiatives. Conversely, the Greater China region recorded a 17% revenue decline, which the company described as an ongoing headwind that will continue to impair near-term results.

Chief Executive Elliott Hill summarized the company’s China strategy as a “reset,” announcing increased investment in Beijing and Shanghai and a revised in-market product assortment. He told investors the steps taken to date are only the beginning and that change must accelerate. To restore margin and consumer relevance, Nike said it is clearing outdated inventory, refocusing on performance shoe innovation, and adjusting prices to offset higher import costs driven by tariffs.

Tariffs are a notable line-item. Nike estimates tariffs will add about $1.5 billion to its cost base for the fiscal year and will reduce gross margin unless offset by pricing or cost cuts. Management has already raised prices on some sneakers, apparel and equipment to mitigate the effect, while acknowledging that pricing has limits in a competitive environment. Meanwhile, Converse remains a material weakness: management plans to reset key lines, including the Chuck Taylor franchise, to halt the 30% sales slide.

Analysis & Implications

The mixed quarter highlights two concurrent narratives: a nascent recovery in Nike’s core North American business and persistent structural challenges in China and at Converse. The 1% sales uptick paired with a 32% income decline suggests margin pressure from tariffs, inventory actions and continued promotional activity. If tariffs remain elevated, Nike faces a sustained squeeze on gross margin unless price increases and cost savings fully offset the impact.

China’s 17% revenue drop underscores the region’s outsized influence on Nike’s global performance. A prolonged China slowdown would constrain Nike’s ability to deliver the revenue growth public markets expect, given the market’s scale and prior contribution to global sales. Management’s plan to invest in Beijing and Shanghai and to tailor assortments is a conventional playbook — the critical variable is timing: how quickly local demand responds and whether competitors reclaim share in the interim.

For Converse, a 30% sales decline across regions indicates a deeper brand and assortment problem rather than a temporary demand dip. Resetting Chuck Taylor and other key lines will require product, marketing and retail alignment; success is uncertain and will likely take multiple quarters to measure. From an investor perspective, the company’s moves — executive refresh, inventory reduction, product reallocation and price increases — are the expected levers to restore growth, but they carry short-term earnings volatility.

Comparison & Data

The table isolates the primary headwinds and pockets of strength. Historically, Nike has relied on China for outsized growth; when that region underperforms, global results are sensitive. The $1.5 billion tariff estimate is a near-term cash-and-margin issue; whether it becomes a recurring structural drag depends on trade policy and Nike’s sourcing adjustments.

Reactions & Quotes

Investor reaction has been mixed: some analysts praise signs of stabilization in North America, while others caution the China trough and Converse decline could persist. The company maintained a cautious tone on the conference call and reiterated that the turnaround will not proceed in a straight line.

“What we’ve done is a start, but it’s not happening at the level or the pace we need to drive wider change.”

Elliott Hill, Nike CEO

Hill framed the company’s actions as early-stage and emphasized the need for accelerated execution in China and product development.

“It would seem like Nike is accelerating its growth. They’re selling more things and getting people to buy more.”

Simeon Siegel, Guggenheim Securities (analyst)

Analysts who voiced cautious optimism pointed to North American momentum and clearer inventory management as positive signs, while reminding investors that margin recovery depends on tariffs and pricing dynamics.

Unconfirmed

• Timing for a sustained China recovery: management has committed investment but has not provided a clear timetable for when Greater China will return to growth.
• Full pass-through of tariffs: it is not confirmed whether Nike can maintain higher consumer prices without dampening demand materially over multiple quarters.
• Converse turnaround success: the effectiveness and timing of the Chuck Taylor reset remain unproven and will require several quarters to validate.

Bottom Line

Nike’s quarter shows early signs that management’s turnaround tactics are working in North America but also highlights significant obstacles. A 1% sales increase paired with a 32% income decline signals that cost pressures — notably tariffs — and regional weakness in China remain major constraints on profitability.

The company’s strategic pivots — leadership changes, inventory rationalization, renewed focus on performance footwear and targeted investments in China — are the right levers in principle, but they will take time. Investors and industry watchers should watch three indicators in the coming quarters: sequential trends in Greater China revenue, margin trajectory after tariff impacts, and early sales responses to the Converse assortment reset.

Sources

• The New York Times — news report summarizing Nike’s quarterly results and conference call.
• Nike, Inc. Investor Relations — official company releases and filings (corporate/official).
• Guggenheim Securities — analyst commentary (financial research).