Nike on Thursday posted quarterly earnings and revenue that topped Wall Street’s estimates, as strength in North America helped to offset a plunge in China sales.

The company’s stock slid more than 6% in extended trading Thursday, as investors digested the weakness in China and the sustained hit Nike is taking from higher tariffs.

Here’s what Nike reported for its second fiscal quarter of 2026, according to consensus estimates from LSEG:

• Earnings per share: 53 cents vs. 38 cents expected
• Revenue: $12.43 billion vs. $12.22 billion expected

The athletic apparel retailer said sales in North America rose 9% to $5.63 billion. But revenue in its Greater China market dropped 17% to $1.42 billion.

The sneaker company is just over a year into CEO Elliott Hill’s turnaround strategy, focusing on regaining its growth and market share, clearing out old inventory and investing in wholesale relationships.

“Fiscal year ’26 continues to be a year of taking action to rightsize our classics business, return Nike digital to a premium experience, diversify our product portfolio, deepen our consumer connection, strengthen our partner relationships and realign our teams and leadership,” Hill said on a call with analysts. “And I say we’re in the middle inning of our comeback.”

“We’re nowhere near our potential,” he added.

Hill said Nike’s improvements in its China market are “not happening at the level or the pace we need to drive wider change,” though he said the country remains one of the company’s most powerful long-term opportunities.

Nike expects fiscal third quarter revenues to fall by a low single digit percentage, with modest growth in North America. It also anticipates gross margins will drop 1.75 to 2.25 percentage points – including a 3.15 percentage point hit from tariffs.

The company said wholesale revenues climbed 8% to $7.5 billion during the quarter. But direct sales — which were a focus for Nike in the years before Hill took over and moved away from the strategy — fell 8% to $4.6 billion.

Nike has also been feeling the impact of tariff increases. It said Thursday that its gross margin decreased by 3 percentage points and inventories dropped 3% primarily due to higher tariffs.

The sneaker company has been reporting weakness in its Converse brand, too. In its first fiscal quarter, Nike said Converse sales dropped 27% – on Thursday, it reported a 30% drop in revenues for the sneaker brand.

Despite the weakness in some parts of Nike’s business, the company highlighted some areas of strength and new initiatives ahead. CFO Matt Friend said on the call that Nike.com posted its best Black Friday ever this year, partially driven by its Air Jordan “Black Cat” launch.

Nike also plans to launch a new footwear platform in January called Nike Mind, which aims to help athletes prepare for performance and competition, Hill said on the call.

Nike has been making larger internal changes under Hill.

Earlier this month, Nike underwent leadership changes to “remove layers,” according to Hill. Under its “Win Now” strategy, the company announced that Chief Commercial Officer Craig Williams would leave the sneaker giant.

Hill called the shakeup a move “about growth and offense.”

“Collectively, these changes amount to us eliminating layers and better positioning Nike to continue to have an impact the way only Nike can,” Hill said in a statement at the time.

Nike shares have dropped more than 13% this year as of Thursday’s close.

President Donald Trump signed an executive order Thursday directing federal agencies to reclassify marijuana, loosening long-standing restrictions on the drug and marking the most consequential shift in U.S. cannabis policy in more than half a century.

The order, once finalized by the Drug Enforcement Administration, moves cannabis out of Schedule I classification — the most restrictive category under the Controlled Substances Act, alongside heroin and LSD — to a Schedule III classification, which encompasses substances with accepted medical use and a lower potential for abuse, such as ketamine and Tylenol with codeine.

“This action has been requested by American patients suffering from extreme pain, incurable diseases, aggressive cancers, seizure disorders, neurological problems and more, including numerous veterans with service-related injuries, and older Americans who live with chronic medical problems that severely degrade their quality of life,” Trump said from the Oval Office on Thursday.

Also on Thursday, the Centers for Medicare and Medicaid Services, led by Dr. Mehmet Oz, is expected to launch a pilot program in April enabling certain Medicare-covered seniors to receive free, doctor-recommended CBD products, which must comply with all local and state laws on quality and safety, according to senior White House officials. The products must also come from a legally compliant source and undergo third-party testing for CBD levels and contaminants.

Shares of cannabis conglomerates were down following the announcement, likely from worries of new compeititon from international companies.

Trulieve’s stock finished the day down about 23%, Green Thumb Industries fell more than 16% and Tilray Brands fell about about 4% as of close on Thursday. The AdvisorShares Pure US Cannabis ETF, which tracks American operators, slid almost 27%.

“Millions of registered patients across the United States, many of them veterans, rely on cannabis for relief from chronic and debilitating symptoms. We commend the administration for taking this historic step. This is only the beginning,” Ben Kovler, founder and CEO of Green Thumb, said in a statement to CNBC.

The reclassification is viewed by many analysts as a financial lifeline for the cannabis industry. The move exempts companies from IRS Code Section 280E, allowing them to deduct standard expenses like rent and payroll for the first time. It also opens the door for banking access and institutional capital previously sidelined by compliance fears.

Many on Wall Street also expect the changes and the Medicare pilot to draw major pharmaceutical players into the sector to chase federally insured revenue.

While CBD has surged in popularity in recent years, with infused consumer goods ranging from seltzers to skin care, the Food and Drug Administration has stopped short of granting the compound its full backing.

Studies have found “inconsistent benefits” for targeted conditions, while FDA-funded research warns that prolonged CBD use can cause liver toxicity and interfere with other lifesaving medications.

Currently, the FDA has only approved one CBD-based drug, Epidiolex, for rare forms of epilepsy.

“I want to emphasize that the order … doesn’t legalize marijuana in any way, shape or form, and in no way sanctions its use as a recreational drug,” Trump said.

Experts and industry insiders told CNBC this week that a reclassification could pave the way for more research into the effects of CBD use.