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Retail
Business Honor
01 October, 2025
Nike posts 1% sales growth despite challenges from rising tariff costs and ongoing China struggles.
Nike reported a surprise 1% sales increase in its fiscal first quarter, to $11.72 billion in revenue, ahead of Wall Street estimates of $11 billion. The company did flag, though, that it expects sales to fall by a low single-digit percentage over the coming holiday season, marking continuing challenges in its turnaround process. Even with the strong quarter, Nike's earnings declined 31% to $727 million, hurt by increased tariff expenses and a 3.2 percentage point decrease in gross margin to 42.2%. Tariffs are now expected to hit $1.5 billion in fiscal 2026, an increase from previous expectations of $1 billion, continuing to squeeze margins. Nike CEO Elliott Hill pointed out strength in wholesale, running, and North America, with wholesale revenue increasing 7% to $6.8 billion and North American sales increasing 4% to $5.02 billion. Weakness persists, though, in China, Converse, and Nike's direct business—stores and e-commerce—which reported a 4% decline in sales.
The Greater China market still remained plagued by structural issues, with revenue declining 9%. Converse sales declined 27%, and Nike doesn't see direct sales to grow again in fiscal 2026. In a bid to spur growth, Nike is reshaping its corporate organization from demographic segments to sport-based teams. This restructuring affects some 8,000 employees and is designed to increase innovation and customer interaction. Nike's "House of Innovation" New York store has already demonstrated robust results with double-digit revenue increases. Nike's recent partnership with Kim Kardashian's Skims brand addresses a wider female customer base, with initial consumer reaction being "very strong." As Nike's turnaround advances, CFO Matt Friend cautioned that "progress will not be linear," highlighting the company's continuing efforts to overcome outside headwinds and enhance profitability.