As revenue falls 10%, Nike preps for $1B tariff hit

Dive Brief:

• As full-year revenues fall 10%, dipping to $46.3 billion, Nike is realigning its teams around key sports, CEO Elliott Hill said on a call with analysts Thursday. Previously, employees were focused on categories like men’s, women’s and kids.
• The goal of the change is to focus employees on designing for the specific athletes they are serving with each sport and give Nike a closer eye on competition. “The truth is we’re in a fight in every sport we’re in and each sport has different competitors,” Hill said, adding that this change will give the brand “a closer line of sight” on the competition.
• Fourth-quarter revenues were likewise down by double digits, falling 12% to $11.1 billion. Nike Direct fell 14% in the quarter, while wholesale was down 9%. Net income declined 86% to $211 million. The company is expecting a $1 billion impact from tariffs.

• Dive Insight:

  Hill on Thursday suggested Nike has reached the bottom of its turnaround slump, while acknowledging that its most recent results “are not up to the Nike standard.” The executive noted that he’s made changes to 11 of his 15 direct reports, is confident in the brand’s product pipeline and is seeing renewed “fight” in Nike’s employee base.

  “We know what it will take to set off the next wave of growth for Nike,” Hill said. “From here, it’s on us to get back to executing at the level we expect.”

  To that end, Nike said it’s made “significant progress” in cutting back on its classic footwear franchises, with those down by more than 20% year over year. CFO Matt Friend said the Air Force 1 is stabilizing, though Dunk will see more reductions ahead. The declines in these products will continue to be a headwind through the first half of its current fiscal year, Friend said, at which point Nike expects to have a “healthy and clean market.”  

  The activewear giant is also seeing major declines in its digital channels as it cuts back on promotions and sees fewer sales for those core franchises, which is expected to continue this year. At the same time, Nike is adding more distribution channels, including Amazon, and continuing to work with wholesale partners to strengthen those relationships.

  “The 4Q25 print wasn’t good in absolute terms, but it wasn’t as bad as feared, and there’s finally hope that the worst is behind them,” Needham analyst Tom Nikic said in emailed comments.

  But tariffs may throw another wrench in the retailer’s turnaround progress: Nike expects a $1 billion hit from tariffs, given current rates. Friend said the retailer intends to mitigate all of that through a variety of actions, which include shifting some manufacturing out of China, optimizing its sourcing mix, negotiating with partners and executing “surgical” price increases in the U.S. starting this fall.

  “We will evaluate corporate cost reduction as appropriate,” Friend said. “However, our highest priority right now continues to be reigniting brand momentum through sport and stabilizing our business.”

  That spending is important, even as it erodes Nike’s bottom line because the retailer “continues to fall out of favor” with shoppers, GlobalData Managing Director Neil Saunders said in emailed comments. Saunders, like Nikic, expressed some willingness to believe that the worst is over for Nike, but said there won’t be “immediate relief” from sales declines given the long timelines on new product development.

  “A boredom factor has settled over the Nike brand and the spotlight is now firmly on other labels – especially in terms of fashion and design,” Saunders said. “It has also lost ground in key categories such as running, where others have the lead in terms of technical functions and forms.”