Nike Takes a $1 Billion Tariff Hit but Shares Jump on Recovery Hopes

Nike’s difficult year ended with more disappointing numbers, as revenues fell 10% to $46.3 billion and net income slumped 44% to $3.2 billion for the fiscal year ending May 2025. 

The final quarter was even worse, with revenue down 12% to $11.1 billion and profit crashing 86% to just $211 million. Yet despite the bleak results, the stock surged nearly 10% in after-hours trading as investors latched onto signs of potential stability.

The sportswear giant is grappling with heavy US tariffs on Chinese imports, set at 55% under a recent trade framework. Nike expects these tariffs to add $1 billion in extra costs this fiscal year. 

To counter the impact, the company plans to cut its reliance on Chinese manufacturing, shifting from 16% of US footwear supply to single-digit levels by the end of fiscal 2026.

What Does This Mean for Me?

Looking ahead, Nike warned that both sales and margins will keep sliding in the current quarter, though at a slower rate. Management forecasts Q1 revenues to decline by mid-single digits, with gross margins down 350 to 425 basis points, of which tariffs alone account for a 100 basis point drag.

Despite weak fundamentals, some analysts point to easing inventories and lower discounting as early steps in Nike’s turnaround efforts. Still, with operating margins in the latest quarter down to 2.9%, the worst in decades, the pressure is on for the global apparel manufacturer to deliver products that reignite consumer interest and demand.