Nike expected to post sales decline as it navigates tariffs, turnaround strategy Brooke DiPalmaSeptember 29, 2025 at 12:55 PM 7 Nike (NKE) is expected to report results for its fiscal first quarter on Tuesday after the market close as the sneaker giant navigates a major turnaround strategy under CEO...
- - Nike expected to post sales decline as it navigates tariffs, turnaround strategy
Brooke DiPalmaSeptember 29, 2025 at 12:55 PM
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Nike (NKE) is expected to report results for its fiscal first quarter on Tuesday after the market close as the sneaker giant navigates a major turnaround strategy under CEO Elliott Hill, who took the helm last fall, and President Trump's tariffs.
Wall Street analysts expect adjusted earnings per share to come in at $0.28, a decline of 60% from the prior-year period, according to data from Bloomberg. Revenue is expected to drop 4.9% to $11.02 billion.
In a call with investors in the previous quarter, CFO Matthew Friend said revenue would be down mid-single digits in the first quarter.
Revenue for its direct-to-consumer business, Nike Direct, is expected to decline 8.3% from a year ago to $4.3 billion. Wholesale revenue is also forecasted to drop roughly 8% as well to $6.28 billion. These would mark improvements from the 14% and 9% declines reported in the prior quarter.
Its namesake Nike brand is expected to see sales drop 5% from a year ago to $10.55 billion, while Converse's revenue is forecasted to decline the most, roughly 9%, to $456.1 million.
Nike stock is down about 8% so far this year.
"Nike is making the right moves by cleaning up inventory, increasing newness, and strengthening relationships with wholesale partners," Telsey Advisory Group analyst Cristina Fernández said in a note to clients. "However, the brand still seems a few quarters away from reaching stabilization."
She pointed to "several profit headwinds" like new products; a return to wholesale partners like Dick's Sporting Goods (DKS) and JD.com (JD), among others; and the impact of tariffs.
"We will continue navigating through several factors that create uncertainty in this operating environment, including for the consumer, and so our outlook reflects our best assessment of these factors based on the data we have available today," Friend said earlier this year.
Nike also projected gross margins to fall between 350 and 425 basis points in the current quarter, including an approximately 100 basis points of negative impact from tariffs alone. Wall Street expects gross margin to come in at 41.7% for the quarter, an improvement from the 40.3% reported in the prior quarter.
"We estimate a gross incremental cost increase to NIKE of approximately $1 billion," Friend said, adding it would cut its reliance on China for manufacturing the goods it sells in the US as part of this strategy.
Chinese suppliers currently account for about 16% of the shoes the company imports into the US. It plans to bring that down to the "high-single-digit range" by the end of this fiscal year.
The sneaker giant also planned for a "surgical price increase" in the US, set to go into effect this fall.
Since the last quarter, though, tariffs on countries like Vietnam, Cambodia, and Indonesia have increased to 46%, 19%, and 19%, respectively, and Telsey's Fernández now estimates the impact could be ~$1.5B.
Bank of America analyst Lorraine Hutchinson wrote in a recent client note that Nike can "fully mitigate the cost of tariffs" if sales trends continue to turn around.
Product innovation and inventory levels will be top of mind too, especially ahead of the World Cup in 2026 and the recent launch of NikeSKIMS, which debuted last Friday after being delayed.
Nike shoes for sale at a store in Annapolis, Maryland, on April 7, 2025. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images) (JIM WATSON via Getty Images)
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at [email protected].
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