Nike reports surprise sales growth, but CEO warns of more work ahead amid tariffs and China drag
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Nike's turnaround effort gained traction despite weakness in China and tariffs pressuring margins.
PHOTO: REUTERS
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Bengaluru - Nike on Sept 30 reported a surprise rise in first-quarter revenue and beat profit expectations as the storied sportswear brand’s turnaround effort gained traction despite weakness in China and tariffs pressuring margins.
The company also managed to clear some of its bloated inventory and wholesale revenues returned to growth in a sign of early success for chief executive Elliott Hill’s plan to get Nike back to its former glory.
Executives warned the recovery was still a way off.
While wholesale revenues rose 5 per cent on a currency neutral basis, margins still faced a drag from higher costs of products due to tariffs.
The company’s first-quarter revenue rose 1 per cent on a reported basis to US$11.72 billion (S$15.1 billion). Analysts had expected a fall of 5.1 per cent to US$11 billion, according to data compiled by LSEG.
Nike now expects tariffs to cost it about US$1.5 billion in 2025, compared with the US$1 billion expected earlier. The sportswear brand makes nearly all its shoes in countries such as Vietnam that have been hit with steep duties under US President Donald Trump.
Mr Hill, a Nike veteran, took the reins in 2024 and has vowed to refocus the brand around core sports like running following a string of weak quarters, and to producing the kind of cutting-edge products Nike was known for.
“We’re also realistic that we are turning our business around in the face of a cautious consumer tariffs uncertainty and teams that are still settling into this sports offense,” Mr Hill said on a post-earnings call
In the company’s earnings statement, Mr Hill admitted Nike still had “work ahead to get all sports, geographies, and channels on a similar path”.
Nike forecast second-quarter revenue to fall in the low-single digits, compared with estimates of a 3.1 per cent drop. It expects its struggling wholesale business to record growth for fiscal 2026 as well.
China, Nike’s third-largest market, has been a particular problem, and executives said recovery there would take longer. The country accounted for 15 per cent of overall sales in fiscal 2025. Sales in Greater China fell for the fifth straight quarter for the three months ended Aug 31 as Nike struggled to drum up demand in the face of stiff competition from domestic brands including Anta and Li-Ning.
The company has also lost market share to younger rivals such as On and Deckers’ Hoka. Mr Hill said Nike sent US basketball stars LeBron James and Ja Morant to China recently as ambassadors, adding that he expects sports like running and basketball to drive growth in the region. REUTERS
