Nike (NKE, Financial) just got a $1 billion wake-up call—and it's coming straight from Washington. In response to newly imposed tariff rates, the company says it's staring down a hefty increase in costs that could reshape its entire sourcing strategy. CFO Matthew Friend called it a “meaningful cost headwind,” with around 60% of Nike's apparel still coming from Vietnam, China, and Cambodia, and 95% of its shoes made in Asia. That dependency now looks expensive. To soften the blow, Nike plans to rebalance its global factory mix, push through “surgical” price increases in the U.S., and slash overhead. It's all part of an urgent bid to shield margins while absorbing the tariff pain.
This tariff bombshell dropped alongside some tough financial news. Nike's latest quarter came in ugly—revenue fell 12% to $11.1 billion, marking its weakest quarter in over three years. The market hasn't been kind either: shares have shed nearly a third of their value in the past 12 months. CEO Elliott Hill didn't sugarcoat it: “The results are where we planned. That said, we're not happy with where we are.” In plain terms, it's a reset moment. Corporate cost cuts are on deck. Consumer prices are headed up. And the brand that once dominated American sportswear now finds itself stuck in damage-control mode.
Quilter Cheviot analyst Mamta Valechha didn't mince words: this could be Nike's lowest point in decades. Post-pandemic softness, demand pressures, and now a geopolitical tax squeeze? It's a brutal combo. She noted Nike might be “nearly at rock bottom,” and while management is signaling long-term confidence, the short-term path looks bumpy. Tariffs aren't just a line item—they're forcing a rethink of Nike's manufacturing playbook. Whether the company can sprint through this slowdown—or limp—now depends on how quickly it can execute, reprice, and reposition.
