Nike

Nike Posts Surprise Revenue Growth Despite $1.5 Billion Tariff Burden

Nike has reported an unexpected rise in first-quarter revenue and stronger-than-anticipated profits, signalling early progress in its turnaround strategy even as tariffs and sluggish demand in China weigh on the business.

Shares of the sportswear giant rose more than 3% on Wednesday after the company disclosed that bloated inventories had been trimmed and wholesale revenues returned to growth—both seen as key steps in CEO Elliott Hill’s plan to revive the brand.

Revenue for the quarter ended August 31 increased 1% to $11.72 billion, beating analyst expectations of $11 billion, according to LSEG data. Earnings per share came in at 49 cents, comfortably ahead of the 27 cents forecast. However, gross margin fell 320 basis points to 42.2%, pressured by tariffs and higher production costs.

Nike now projects tariffs will cost the company around $1.5 billion this fiscal year, up from a previous estimate of $1 billion. Most of its footwear production remains concentrated in countries such as Vietnam, which have been subject to heavy U.S. import duties.

Hill, who stepped into the CEO role last year, has pledged to return Nike’s focus to core sports like running and basketball while developing innovative products to restore its competitive edge. On a post-earnings call, he acknowledged the challenges ahead: “We’re realistic that we are turning our business around in the face of a cautious consumer, tariff uncertainty, and teams that are still settling into this sports offense.”

The company also warned that recovery in China, its third-largest market, will take longer. Sales in Greater China declined for the fifth consecutive quarter as domestic rivals Anta and Li-Ning strengthened their hold. Nike has dispatched NBA stars LeBron James and Ja Morant to the country in a bid to reconnect with consumers, but executives said demand remains weak.

Looking ahead, Nike expects second-quarter revenue to decline in the low-single digits, slightly better than the 3.1% drop analysts had predicted. Wholesale business is forecast to return to growth in fiscal 2026, while direct-to-consumer operations are not expected to expand until then.

Despite the headwinds, analysts said the results showed tentative progress. “Nike beat the low bar set for EPS and showed some wholesale strength, but the underlying fundamentals are still shaky,” said David Bartosiak, stock strategist at Zacks Investment Research.

Oh hi there 👋
It’s nice to meet you.

Sign up to receive awesome content in your inbox, every week.

We don’t spam!

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *