Nike Faces Sales Pressure as China Weakens and Middle East Conflict Hits Demand

Nike’s comeback hit a hard patch on March 31, when shares dropped 15.5% to $44.63, a more than decade-low close, after the company warned that current-quarter sales would weaken and China revenue would fall 20%. The sharper problem is that the hit is not coming from one side of the business. Middle East conflict was also disrupting store traffic across Europe, the Middle East and Africa, turning a turnaround story into a test of how much damage Nike can absorb at once.

The warning landed beside Nike’s fiscal 2026 third-quarter results for the period ended February 28, 2026. Revenue was $11.3 billion, flat on a reported basis and down 3% currency-neutral. Gross margin slipped 130 basis points to 40.2%, and diluted earnings per share came in at $0.35. Nike said brand revenue rose in North America, but declined in EMEA and Greater China, a split that leaves the U.S. as the clear stabilizer while overseas demand cools.

Elliott Hill, who returned to Nike as president and chief executive effective October 14, 2024, has been trying to rebuild momentum across the company’s assortment, pricing and retail execution. The pace has been uneven, and Nike itself has said the “Win Now” actions meant to sharpen the business would continue to affect results through the balance of calendar 2026. Chief financial officer Matthew Friend said higher tariffs were a primary reason gross margin fell, adding another layer of pressure on a brand already working through inventory and promotion headwinds.

That is what makes the current moment so unforgiving. Nike can manage a soft patch in China or a disruption in EMEA, but not both while tariffs are squeezing margins and investors are already impatient for cleaner growth. The company’s latest numbers suggest the reset is real, but so is the narrowing room to make mistakes. Hill has the right diagnosis, yet the market is asking for something harder: proof that Nike can turn discipline into durable demand before geopolitics and weaker China sales do more of the talking.