Nike yesterday revealed that it expects $1.5 billion in gross incremental prices, on an annualized foundation, due to tariffs. That’s a 50% enhance from Nike’s final estimate, supplied in June, of $1 billion. In the meantime, Nike’s gross margin for its first fiscal quarter of 2026 decreased 320 foundation factors, partly on account of “elevated product prices, together with new tariffs, and channel combine headwinds,” EVP and CFO Matthew Buddy mentioned on a name with analysts.
Buddy acknowledged that Nike is revising its numbers as a result of, for the reason that firm’s final earnings name, “new reciprocal tariff charges have been elevated for sure nations.”
“Given the magnitude and timing of the latest price will increase, we now anticipate the online headwind in fiscal ’26 to extend from roughly 75 foundation factors to 120 foundation factors to gross margin,” he added. “We’re monitoring developments intently, and I stay assured in our potential to leverage our strengths, our scale and the deep expertise of our management group to navigate by way of this disruption.”
Nike remains to be manufacturing in China, which has been the topic of a few of the highest import tariffs beneath President Donald Trump’s administration. About 16% of Nike’s footwear imported into the U.S. comes from China and is subsequently topic to a tariff of 30%. Nike has vowed to scale back its imports from China to the “high-single-digit vary by the top of fiscal 2026.”
Nonetheless, Nike remains to be largely depending on Cambodia, Vietnam and Indonesia, the place tariffs are nonetheless in place. In August, the U.S. set a 19% tariff on Cambodian imports, down from a earlier 49%. Tariffs on items imported into the U.S. from Indonesia stand at 19%, as nicely. Tariffs on items imported from Vietnam presently stand at 20%.
Whilst they detailed additional fallout from tariffs, Nike executives mentioned they had been optimistic that they might climate the storm beneath their ongoing “Win Now” plan, carried out beneath Hill.
Hill, a Nike veteran, returned to the corporate in October 2024 after retiring from a greater than 30-year stint at Nike. His plan to revitalize the enterprise includes restoring relationships with wholesale accounts, segmenting groups by sport (somewhat than males’s, girls’s and youngsters’), and strengthening product innovation and design, notably in working.
“There’s vital work forward,” Hill mentioned on the earnings name. “And as I mentioned to the group, progress gained’t be completely linear, however the route is. On our final name, I mentioned it was time to show the web page, and I consider this quarter displays the various methods we’re doing simply that.”
Nike reported $11.7 billion in first-quarter income, up 1% 12 months over 12 months and above analysts’ expectations of $11 billion. Most of this got here from Nike’s wholesale channel, the place income totaled $6.8 billion, up 7% from a 12 months in the past. In the meantime, income for Nike’s Direct channel, which incorporates its web site and shops, got here in at $4.5 billion, down 4% from the prior 12 months. In Better China, quarterly income was down 9% 12 months over 12 months.
Jessica Ramírez, co-founder of The Shopper Collective, instructed Fashionable Retail that Nike’s estimated hit of $1.5 billion from tariffs is “not nice.” However, she mentioned, “It’s additionally an enormous firm, in order that quantity is smart.” General, Ramírez believes that Nike’s plans to revive the enterprise are on track, however she’d prefer to see extra from performance-wear and the Direct enterprise, which she says are “missing.”
“I really need them to work extra on their in-store expertise,” she mentioned. “I really feel like that’s gotten stagnant. I like all of the advertising campaigns that they’ve completed, and I just like the collections which might be popping out. However I believe the shop expertise may very well be significantly better. … A couple of years again, whenever you walked in there, it was such as you had been buying sooner or later. And it doesn’t really feel that manner anymore.”
One vibrant spot for Nike is its working enterprise, the place gross sales are up “over 20%” within the final quarter, Hill mentioned. Nike can also be focusing extra on soccer, basketball, coaching and sportswear. Its larger wager on wholesale is paying off, together with on Amazon, the place it’s “driving stronger engagement and gross sales than anticipated,” Hill mentioned. Buyer response to the corporate’s new partnership with Skims can also be “very sturdy,” he talked about.
Nonetheless, in August, CNBC reported that Nike deliberate to put off about 1% of its company workers. “The strikes we’re making are about setting ourselves as much as win and create the subsequent nice chapter for Nike,” the corporate mentioned in an announcement.
