“And while we have begun to take actions to reduce this to a net impact of approximately 120 basis points, it is still a significant factor impacting our near-term EBIT margins amidst the turnaround in a very dynamic operating environment.”

In context

“takes across EMEA and APLA. Meanwhile, North America and running stand out again this quarter. And we are growing more confident in our ability to sustain the momentum as we look forward. Being in the middle innings, as Elliott referenced, also means it will take time for the actions we have put into place to change the trajectory on EBIT margins. We have been navigating transitory headwinds to margin due to our WinNow actions. And shifts in the business. Including product and channel mix, and continued inventory liquidation. As we highlighted last quarter, we are also navigating new structural headwinds from the $1.5 billion of annualized incremental product costs due to higher US tariffs. This represents a gross headwind of approximately 320 basis points to gross margin. In fiscal 2026. And while we have begun to take actions to reduce this to a net impact of approximately 120 basis points, it is still a significant factor impacting our near-term EBIT margins amidst the turnaround in a very dynamic operating environment. All in all, we have made meaningful progress through our five win now actions. Yet there is more work to do and our teams are hustling. For this quarter, revenues were up 1% on a reported basis. And flat on a currency-neutral basis. NIKE Direct was down 9% with NIKE Digital declining 14%. And NIKE stores down 3%. Wholesale grew 8%. This included a top-line headwind of approximately $550 million from the reduction of our Classics franchises. Down over 20% versus the prior year. This means our currency-neutral revenue grew 6% excluding the impact of this headwind. Gross margins declined 300 basis points to 40.6% on a reported basis primarily due to increased product costs due to higher tariffs in North America as well as inventory obsolescence in Greater China that was not contemplated nine”