Nike Q1 sales edge higher, but $1.5 billion tariff hit looms

Nike reported a modest revenue uptick in the first quarter but warned of significant tariff-related pressures in the coming months. The sportswear giant’s revenue rose 1% year-on-year to $11.7 billion, but net income slumped 31% to $700 million, as gross margin contracted 320 basis points to 42.2%, according to Investing.com.

Sales in the flagship Nike brand grew 2%, while Converse revenue plunged 27%. China, one of Nike’s key markets, saw a 9% decline in revenue. CEO Elliott Hill cautioned that both China and Converse would remain under pressure in fiscal 2026.

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Looking ahead, Nike forecast low single-digit sales decline in the current quarter (September–December), citing tariff costs as a major drag. The company expects tariffs to weigh $1.5 billion on FY26 earnings, compressing gross margin by up to 3.4 percentage points.

Still, Nike pointed to bright spots in its performance. Wholesale revenue climbed 7% to $6.8 billion, while North America sales rose 4% to $5 billion. Hill said Nike is making progress in three strategic focus areas—running, wholesale, and North America—while also working to reinvigorate innovation and clear excess inventory.

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Heavy discounting to liquidate old inventory weighed on profitability, but Hill emphasized it as part of the turnaround effort. Nike also restructured its workforce in August, cutting about 1% of staff and realigning roles for roughly 8,000 employees.

“Despite short-term pressures, we are laying the groundwork to return Nike to sustainable growth,” Hill said.