Nike Just Did It—Turned $1.5 Billion Pain Into Performance

Nike Inc (NYSE:NKE) just proved it still knows how to make the right moves. The sportswear giant thumped Wall Street's expectations, flipping a $1.5 billion tariff drag into proof that its turnaround is working. Investors cheered, sending shares up during Thursday trading — evidence that a turnaround story can outweigh a headline-grabbing hit from tariffs.

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Read Also: Nike Stock Jumps On Q1 Earnings Beat: ‘We Still Have Work Ahead’

Tariffs Take A Shot, Nike Still Scores

The company warned that Donald Trump-era tariffs are costing it around $1.5 billion annually, a 50% jump from earlier forecasts, mainly due to Vietnam-made footwear now facing a 20% levy.

Despite the bite, tariffs only nibble at about 3% of last year's $46.3 billion revenue, and Nike has been shifting production sites to manage costs. CEO Elliott Hill, back from retirement to lead the comeback, emphasized that structural challenges exist but aren't derailing the game plan.

Back To Basics: Wholesale And Performance Shoes Lead The Rally

Nike's 7% growth in wholesale to retailers like Foot Locker shows the power of mending relationships and focusing on core product lines. Performance shoes for running, training, basketball, and football are driving momentum, while distractions from casual wear have been dialed back. Revenues rose across every region except Greater China, where sales fell 10% and operating profit dropped 25%, but Hill stressed the long-term potential remains strong.

Gross margins dipped from 45.4% to 42.2%, reflecting higher discounts and tariffs, but the market's focus is on the turnaround trajectory, not the short-term hit. Hill even drew inspiration from England's UEFA Women's European Championship win, comparing Nike's comeback effort to a team executing the perfect play.

Investor Takeaway

Nike's earnings show that tariffs are more of a speed bump than a roadblock. With wholesale growth, a refocus on performance products, and leadership driving a clear comeback, the company is kicking off a new era of resilience.

For investors, the message is clear: Nike's still paying the price of tariffs, but it's starting to run faster than the hurdles.

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