Nike (NYSE: NKE) just gave us a clear look at its current business state—and let’s just say the numbers tell a tough story. During its latest earnings call, the sneaker giant revealed it’s expecting to eat a whopping $1 billion in extra costs from tariffs in fiscal 2026. That’s a serious hit.
Tariffs Are Hitting Hard
CFO Matt Friend said during the Nike earnings call that new tariffs on Chinese imports are going to cost the company big time. We’re talking an estimated $1 billion in additional expenses just in this fiscal year.
“With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion,” Friend said.
To fight that impact, Nike plans to raise prices, cut costs, and shift more of its supply chain out of China. Right now, 16% of Nike’s supply chain is based in China, but they’re aiming to cut that to single digits by the end of the year.
NKE Earnings Drop, But Beat Estimates
Even with all the headwinds, Nike managed to beat Wall Street expectations slightly.
- EPS: $0.14 vs $0.13 expected
- Revenue: $11.10B vs $10.72B expected
However, net income came in at just $211 million—an 86% drop from last year’s $1.5 billion.
Friend confirmed this quarter is expected to be the worst hit, saying the financial impact would ease in the coming months.
CEO Elliott Hill: “Time to Turn the Page”
Nike’s CEO Elliott Hill said it’s time for a reset.
“The results we’re reporting today in Q4 and in FY25 are not up to the Nike standard,” said Hill. “But the work we’re doing to reposition the business through our ‘Win Now’ actions is having an impact.”
That includes focusing more on performance products and sports innovation. Hill says they’re realigning their teams at Nike, Jordan, and Converse to build gear specifically for athletes—not just lifestyle consumers.
DTC vs. Wholesale Shakeup
Nike’s Direct-to-Consumer (DTC) strategy hit a wall:
- Digital sales down 26%
- Wholesale down 9%
- Nike Direct revenue down 14%
But here’s a win: Nike store sales were up 2%, and foot traffic decline is slowing, according to Placer.ai. Nike is also rebuilding wholesale relationships, including new ones with Aritzia and Urban Outfitters. And yes—they’re going back to Amazon this fall for the first time since 2019.
Regional Breakdown: North America and China
- North America: Sales fell 11% to $4.70B but beat expectations
- China: Revenue was $1.48B, slightly under forecasts
Nike admits the China recovery is taking longer due to local competition and inventory cleanup.
What About Skims?
One thing missing from the call: Nike’s delayed collab with Kim Kardashian’s Skims. It was supposed to launch last quarter but got pushed. Still, it’s expected later this year and could help Nike capture more of the female demographic.
New Product Wins
Nike’s new releases, like the A’ja Wilson sneaker, show promise. The first drop sold out in just 3 minutes. Hill says they’ll be doubling the production for upcoming drops.
The Bigger Picture
Nike is clearly in transition. From slashing tariffs to reorganizing its leadership strategy, the brand is fighting to get back on top. While this quarter saw a steep earnings decline, the stock rallied nearly 10% during the earnings call—proof that investors believe in the long-term plan.
FAQs
Q1: How much will tariffs cost Nike?
About $1 billion during fiscal 2026, due to new rates on Chinese imports.
Q2: Did Nike beat Wall Street expectations?
Yes, slightly. EPS and revenue both came in above analyst forecasts.
Q3: Why did Nike’s earnings drop 86%?
Heavy discounting, supply chain shifts, and a business reset strategy contributed.
Q4: Is Nike returning to Amazon?
Yes. Starting this fall, Nike will sell a curated collection on Amazon again.
Q5: What’s the status of the Skims partnership?
It’s delayed but still coming later this year. It’s key for targeting women shoppers.
Q6: What’s Nike doing to bounce back?
Shifting supply, raising prices, refocusing on sports, expanding wholesale deals.
Nike may be down right now, but don’t count it out. With a clearer plan and sharper focus, NKE earnings might look a whole lot better in the quarters to come.