Nike Inc., the global athletic apparel powerhouse, is bracing for steeper costs from escalating international tariffs, with Chief Financial Officer Matthew Friend revealing an updated estimate of $1.5 billion in expenses for fiscal 2026— a 50% jump from the company’s prior projection of $1 billion.
Friend, speaking during Nike’s fiscal first-quarter 2026 earnings call on Tuesday, attributed the upward revision to new reciprocal tariff rates that took effect in recent months. “We are monitoring developments closely, and I remain confident in our ability to leverage our strengths, our scale and the deep experience of our leadership team to navigate through this disruption,” Friend assured investors, emphasizing Nike’s resilience despite the mounting pressures.
The disclosure came as Nike reported mixed results for the quarter ended August 31, 2025, with revenues ticking up 1% year-over-year to $11.7 billion on a reported basis, though flat on a currency-neutral basis. While wholesale revenues showed signs of recovery, Nike Direct sales dipped 5%, dragged down by a 12% decline in digital channels and a 1% drop in company-owned stores.
Profitability took a hit, with gross margins contracting 320 basis points to 42.2%, squeezed by aggressive discounting in Nike stores, unfavorable channel mix shifts, and the fresh wave of tariff-related product costs. Net income fell 31% to $700 million, or $0.49 per diluted share—still beating Wall Street’s consensus estimate of $0.27 per share. Inventories edged down 2% to $8.1 billion, reflecting reduced units but offset by higher input costs from tariffs, primarily in North America.
The tariff burden, largely tied to U.S. policies under President Donald Trump, is not unique to Nike. In July, General Motors disclosed a $1.1 billion tariff sting in its second quarter alone, projecting a full-year impact of $4 billion to $5 billion.
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Automaker Stellantis, meanwhile, booked a $2.7 billion net loss for the first half of 2025, pinning much of the blame on tariff-driven disruptions. Tariffs have become a persistent refrain in corporate America, surfacing in 361 earnings calls by S&P 500 companies between June 15 and September 12, according to a FactSet analysis. That’s down 21% from the prior quarter but marks the second-highest tally over the past decade, underscoring the policy’s lingering shadow on global supply chains.
Looking ahead, Friend tempered expectations, forecasting a net gross margin headwind of 120 basis points for fiscal 2026 from tariffs—up from 75 basis points previously—and warning that “progress will not be linear” as the company grapples with uneven recoveries in markets like Greater China and its Converse brand. Nike anticipates ongoing revenue and margin pressures in the current quarter, with gross margins potentially dipping another 3 to 3.75 percentage points. Despite the challenges, Friend highlighted early wins from Nike’s “Win Now” strategy, including momentum in wholesale partnerships and running categories. Shares in Nike rose modestly in after-hours trading following the report, buoyed by the earnings beat and signals of strategic discipline.
