Nike (NKE) is set to report results for its fiscal first quarter on Tuesday after the market close as the athletic footwear and apparel giant navigates a major turnaround strategy under CEO Elliott Hill, who took the helm last fall, alongside challenges from President Trump’s tariffs on imports.
Wall Street analysts expect adjusted earnings per share of $0.28, a decline of roughly 60% from the prior-year period, according to Bloomberg data. Revenue is forecasted to fall 4.9% to $11.02 billion, reflecting the pressures of a shifting global trade landscape and operational adjustments.
In the previous quarter, CFO Matthew Friend told investors to anticipate mid-single-digit revenue declines in the first quarter. That outlook appears to be materializing, particularly across Nike’s key segments. Nike Direct, the company’s direct-to-consumer business, is expected to see revenue drop 8.3% year-over-year to $4.3 billion, while wholesale revenue is forecasted to decline roughly 8% to $6.28 billion, though these figures would mark improvements from last quarter’s 14% and 9% declines, respectively.
Nike’s flagship brand is expected to see sales fall 5% to $10.55 billion, whereas Converse is projected to take the steepest hit, with revenue down approximately 9% to $456.1 million. Overall, Nike stock has declined about 8% so far this year, reflecting investor caution amid ongoing uncertainty.
Analyst Cristina Fernández of Telsey Advisory Group said in a client note that Nike is taking the right steps, including cleaning up inventory, introducing new products, and strengthening relationships with wholesale partners. However, she added that the brand “still seems a few quarters away from reaching stabilization,” pointing to several profit headwinds, including new product launches, returns to wholesale partners like Dick’s Sporting Goods (DKS) and JD.com (JD), and the continuing impact of tariffs.
CFO Friend emphasized that Nike’s outlook reflects a careful assessment of multiple factors affecting the operating environment, particularly consumer behavior and global trade conditions. The company projects gross margins to decline between 350 and 425 basis points in the current quarter, with tariffs alone contributing roughly 100 basis points of pressure. Wall Street expects gross margin to come in at 41.7%, an improvement from 40.3% in the prior quarter.
As part of its strategy, Nike anticipates a gross incremental cost increase of around $1 billion to reduce reliance on China for U.S. manufacturing. Currently, Chinese suppliers account for 16% of shoes imported into the U.S., with plans to cut that figure to the high-single-digit range by the end of the fiscal year. The company also intends to implement a “surgical” price increase in the U.S. this fall.
However, tariffs on countries like Vietnam, Cambodia, and Indonesia have risen to 46%, 19%, and 19%, respectively, since the last quarter. Telsey’s Fernández estimates the total impact could reach $1.5 billion. Analysts remain cautiously optimistic: Bank of America’s Lorraine Hutchinson recently noted that Nike could “fully mitigate the cost of tariffs” if sales trends continue to improve.
Looking ahead, product innovation and inventory management will be crucial, particularly with the 2026 World Cup approaching and the recent launch of NikeSKIMS, which debuted last Friday after a delay. Investors and analysts alike will be closely watching how Nike balances cost pressures, innovation, and its broader turnaround strategy in the months ahead.
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