Nike Inc., a global sportswear leader headquartered in Oregon, United States, has projected an additional cost burden of $1 billion due to new U.S. tariffs on Chinese imports in its fiscal year 2026. Despite beating earnings and revenue expectations for Q4 ending May 31, 2025, the company faces continued headwinds from supply chain shifts, price adjustments, and inventory clearance. Nike is reshaping its wholesale strategy and cutting dependence on China, targeting long-term profitability amid short-term margin impacts.
Nike Inc., the global sportswear and footwear giant based in Oregon, United States, reported on June 27 that it expects a $1 billion impact from newly implemented tariffs during its fiscal year 2026. The announcement came alongside its Q4 earnings report, which revealed a steep 86% drop in profits as the company executes a broad business transformation.
Chief Financial Officer Matt Friend said the duties represent a “new and meaningful” cost, but Nike plans to fully mitigate this through supply chain adjustments, collaboration with factory and retail partners, and phased price increases. Currently, 16% of Nike’s supply chain is based in China, but the company plans to reduce that to the high single-digit range by the end of fiscal 2026.
Nike reported earnings per share of 14 cents for the three-month period ending May 31, beating analyst expectations slightly. Revenue came in at $11.10 billion, down 12% from $12.61 billion a year earlier. Net income for the quarter was $211 million, compared to $1.5 billion the previous year.
The decline is attributed to efforts to clear excess inventory and restructure its distribution model. Nike Direct revenue fell 14%, including a 26% drop in digital sales and a 9% decline in wholesale. However, physical store sales rose 2%, hinting at early signs of recovery.
CEO Elliott Hill affirmed that while Q4 marked the deepest financial impact from the turnaround, headwinds are expected to moderate. The company is also focusing on reestablishing its core identity in sports, realigning teams under the Nike, Jordan, and Converse brands to serve specific athlete segments.
Nike has resumed wholesale partnerships with retailers like Aritzia and Urban Outfitters, and starting this fall, will reintroduce its products to Amazon through a select assortment and dedicated brand store.
Sales in North America dropped 11% to $4.7 billion, outperforming analyst expectations. In China, Nike reported revenue of $1.48 billion, slightly below the $1.50 billion forecast.
Despite competition in the Chinese market and lingering inventory issues, Nike remains confident in its long-term strategy. The brand continues to focus on innovative product launches, such as its collection with WNBA star A’ja Wilson, which sold out within minutes.
The apparel segment, which now accounts for 28% of total brand revenue, remains a growth priority, particularly as Nike aims to capture more market share among female consumers.
With fiscal 2026 underway, Nike expects continued margin pressure in the first half but anticipates overall improvements in business performance as it moves forward with its “Win Now” strategy.
