Nike shares dropped more than 10% in premarket trading on Friday as concerns about its performance in China outweighed the company’s earnings beat. Despite posting quarterly earnings and revenue that surpassed Wall Street’s estimates, Nike reported a significant decline in sales in its Greater China market, leading to a 17% drop in revenue in that region. The sportswear giant’s stock movement also reflects the impact of higher tariffs on its business.

CEO Elliott Hill is leading Nike through a turnaround strategy that focuses on regaining growth and market share, as well as investing in wholesale relationships. Hill acknowledged challenges in the China market but remains optimistic about the company’s long-term opportunities in the region. Nike expects modest growth in North America for the fiscal third quarter but anticipates a decrease in gross margins due to tariffs. Despite some weaknesses in its business, Nike highlighted areas of strength and new initiatives, such as the launch of a new footwear platform called Nike Mind. Investors are closely monitoring Nike’s performance in China as it navigates the complexities of its turnaround plan.