Nike Inc. is already looking at hundreds of millions of dollars in new costs due to tariffs. Chief Financial Officer Matthew Friend calls these tariffs a “significant and new cost headwind.” The sporting behemoth announced an even more alarming 86% fourth quarter net income plunge. It dropped to $211 million, a far cry from the $1.5 billion it earned the same day a year ago. Increasing tariffs and a drastic fall in demand — consumer spending has dropped 35% — have pressured Nike like never before. These twin demons are just hitting the company’s bottom line hard.
Recognizing these struggles, Nike is already moving in a positive direction to offset tariff-related costs. The company has made clear that it’s done relying on China’s supply chain. This step is important for strengthening its global sourcing strategy. By diversifying where it produces its goods, Nike is trying to minimize the impact these expensive tariffs have on its bottom line.
As another aspect of their strategy, Nike plans to offset the higher costs by raising prices and shifting the additional costs to consumers. This approach should insulate its margins as it steers through the shaky economic waters of today.
Nike’s CEO Elliott Hill expressed optimism about the company’s future direction, stating, “It’s time to turn the page on Nike’s current situation.” He emphasized the importance of innovation and customer-focused products, asserting that “Nike, Jordan, and Converse teams will now come to work every day with a mission to create the most innovative and coveted product, footwear, apparel, and accessories for the specific athletes they serve.”
Elliott Hill highlighted that “these sport-obsessed teams will create greater dimension and distinction for our three brands,” which he believes will make Nike more competitive and accelerate growth.
Even amidst the global upheaval, analysts such as managing director of GlobalData, Neil Saunders, have shared positive sentiments about the long-term profitability of Nike. He stated that he has “some confidence” that Nike is “over the worst of things as far as profitability is concerned.”
Moving forward, Nike expects to return to its long-term revenue growth target in the high-single-digit percent range by the conclusion of fiscal 2026. The company’s delayed launch of NikeSkims with Kim Kardashian may play a role in revitalizing its brand appeal and market presence.