Sneaker giant’s turnaround plan shows progress despite tariffs and brand challenges
Nike (NKE) delivered better-than-expected fiscal first-quarter results on Tuesday, offering investors a glimpse of progress in its ongoing turnaround under CEO Elliott Hill. The sneaker giant posted adjusted earnings per share of $0.49, handily beating Wall Street estimates of $0.28, according to Bloomberg. Revenue came in at $11.7 billion, up 1% year-over-year, surpassing forecasts of $11.02 billion.
The company’s wholesale division drove much of the momentum, with sales rising 7% to $6.8 billion, far above the anticipated $6.3 billion decline. Nike Direct, its direct-to-consumer arm, reported a 4% drop to $4.5 billion—better than the expected 8.3% decline. These results mark a sharp improvement from steeper drops seen in the prior quarter.
Nike’s namesake brand also outperformed, climbing 2% to $11.4 billion, where analysts had predicted a 5% decline. However, Converse posted a steep 27% revenue fall to $366 million, far worse than expected. Gross margins fell 320 basis points to 42.2%, though still slightly above expectations and improved from last quarter’s 40.3%.
CEO Elliott Hill highlighted the company’s “Win Now” actions in North America, Wholesale, and Running as key drivers of the quarter’s gains. Analysts note that while Nike has taken steps to clean up inventory, invest in new products, and strengthen wholesale ties, full stabilization remains several quarters away.
Tariffs remain a looming headwind, with Nike’s CFO previously estimating a $1 billion hit, now revised to $1.5 billion amid rising duties on imports from Vietnam, Cambodia, and Indonesia. The company aims to reduce reliance on China, which currently accounts for 16% of U.S. imports, to the “high-single digits” this year.
Shares of Nike ticked higher in after-hours trading, as investors cautiously welcomed signs that the turnaround is gaining traction.
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