Core Insights - Nike's stock dropped nearly 10% following a significant decline in profits, attributed to an anticipated $1.5 billion impact from tariffs and a slowdown in the Chinese market [1][4][5] Financial Performance - In Q2 of fiscal year 2026, Nike's revenue increased by only 1% to $12.4 billion, while net income fell by 32% to $792 million, resulting in diluted earnings per share decreasing from $0.78 to $0.53 [2][4] - Gross margin decreased by 300 basis points to 40.6%, primarily due to higher tariffs and excess inventory in China [5] Regional Performance - North America showed resilience with a 9% revenue increase to $5.6 billion, driven by a 24% rise in wholesale, despite a 16% decline in Nike Digital [6][8] - In contrast, revenue in China plummeted by 17% to $1.4 billion, with EBIT dropping by 49%, and direct sales falling by 18%, including a 36% decline in Nike Digital [9][11] Strategic Initiatives - The company is focusing on margin expansion as a top priority, with plans to cut classic footwear franchises by over $4 billion by the end of the fiscal year, which is expected to create a $550 million headwind in revenue for the quarter [5][10]