Nike (NKE) Stock Rises After Q1 Earnings Beat, Turnaround Progress Amid Tariff Concerns
Nike (NKE) shares experienced a surge after the company reported better-than-expected fiscal first-quarter results on Tuesday, September 30, 2025. The report indicated progress in its turnaround strategy under CEO Elliott Hill, even amid concerns about tariffs. The stock rose approximately 5% following the release of the report.
Financial Highlights
The company's adjusted earnings per share (EPS) were $0.49, exceeding Wall Street analyst estimates of $0.28. Revenue increased by 1% year-over-year to $11.72 billion, surpassing the expected $11.02 billion. However, revenue decreased by 1% when adjusted for currency impacts. The earnings release highlighted the "Win Now" strategy which helped drive momentum in key areas.
- Adjusted EPS: $0.49 (vs. $0.28 expected)
- Revenue: $11.72 billion (vs. $11.02 billion expected)
- Year-over-year revenue increase: 1%
Segment Performance
Nike Direct, the company's direct-to-consumer business, experienced a 4% decrease in revenue, totaling $4.5 billion, which was better than the anticipated 8.3% drop. Wholesale revenue increased by 7% to $6.8 billion, significantly exceeding the forecast of an 8% decline. Sales for the namesake Nike brand grew 2% to $11.4 billion. Conversely, sales at Converse fell 27% to $366 million, a steeper decline than expected.
Gross Margins and Tariff Impact
Nike's gross margins decreased by 320 basis points to 42.2% in the quarter. This decrease was attributed to "lower average selling price, reflecting higher discounts and channel mix, as well as higher tariffs in North America." The company anticipates an approximately $1.5 billion impact from tariffs, an increase from the previously estimated $1 billion. Tariffs are expected to negatively impact gross margin by 120 basis points for fiscal year 2026.
Stock Performance and Analyst Sentiment
On October 1, 2025, Nike stock rallied sharply, closing around $73.70, up 5.7% for the day. Despite this, year-to-date, NKE is down about 2.7%, lagging the S&P 500’s ~+13% gain. Wall Street analysts rate NKE a Moderate Buy, with an average price target around $80–81. JPMorgan raised its price target to $100, implying ~35% upside.
Strategic Developments
Nike’s strategy focuses on marketing, supply-chain resilience, innovation, and sustainability. The company is shifting production out of China due to tariffs, normalizing inventory through discounting, and emphasizing advanced design in its products. Nike is also pushing its “Move to Zero” climate goals, having already surpassed its Scope 1/2 goals by cutting emissions ~70% since 2015.
Future Outlook and Investment Forecast
Most analysts anticipate moderate upside in Nike stock over the next 12 months. Bulls emphasize Nike’s industry leadership and innovative products. Bears point to economic and margin headwinds and trade tensions. Consensus targets range from $58 to $115, reflecting varying growth and risk scenarios. The company will look to navigate the external environment to capitalize on the momentum.
Nike Q1 FY2026 Key Figures
| Metric | Value |
|---|---|
| Revenue | $11.72 Billion |
| EPS | $0.49 |
| Gross Margin | 42.2% |
Recent News and Product Launches
Nike has actively engaged in product launches and collaborations. The company unveiled NikeSKIMS, a collaboration with Kim Kardashian’s SKIMS brand, targeting women’s lifestyle apparel. Additionally, Nike introduced the Shox Z, a retro-inspired sports-lifestyle sneaker, endorsed by tennis star Aryna Sabalenka.
Analyst Reactions
Analysts reacted positively to the results. Jefferies’ Randal Konik said the quarter was an “early innings” of Nike’s turnaround. Morningstar’s David Swartz noted retailers were “reacting positively to Nike’s new running shoe lineup.” However, some analysts remain cautious, citing concerns about direct-to-consumer weakness and China.
Leadership Changes and Legal Updates
In May 2025, Nike overhauled its executive lineup, naming Amy Montagne as President of the Nike Brand. Additionally, Nike settled its lawsuit against StockX over unauthorized NFT images and counterfeit sneakers. In March 2025, a jury awarded Nike ~$355K in a patent suit against Lululemon for copycat running shoes.
Challenges Ahead
Despite the positive earnings report, Nike faces challenges, including tariff costs expected to hit $1.5 billion this fiscal year. China sales fell 9%, and seasonal sell-through continues to underperform. The company expects revenue and gross margin headwinds from China to persist throughout fiscal 2026. These challenges will impact the speed and scope of Nike’s turnaround, putting additional emphasis on the company’s need to refocus its strategy.
Sources: Company filings and press releases; Market data from MarketBeat; analyst reports and news (Reuters, Modern Retail, Investing.com, Seeking Alpha, etc.); Nike Newsroom releases. All figures and quotes are drawn from cited sources.
