By Bill Peters
Margins slip despite surprise gain in sales
Nike reported quarterly results on Tuesday.
Shares of Nike Inc. moved higher in extended trading Tuesday after the sneaker maker reported fiscal first-quarter results that topped Wall Street’s estimates, helped by a surprise sales gain. But margins slipped, and the company warned that its turnaround effort “will not be linear.”
Nike’s stock (NKE) was up 1.4% after hours.
The company reported fiscal first-quarter revenue of $11.72 billion, up 1% year over year. Nike earned 49 cents a share during the quarter. Gross margins decreased to 42.2%, due to U.S. tariffs and higher discounting.
Analysts polled by FactSet expected Nike to report adjusted earnings per share of 27 cents, on revenue of $10.99 billion.
Sales at Nike’s own physical and online stores fell during the quarter, while sales at outside retailers rose. Revenue for Nike’s Converse brand slid 27%.
“While we’re getting wins under our belt, we still have work ahead to get all sports, geographies and channels on a similar path as we manage a dynamic operating environment,” Chief Executive Elliott Hill said in a statement.
Chief Financial Officer Matthew Friend added that progress on Nike’s recovery “will not be linear as dimensions of our business recover on different timelines.”
Analysts saw the results as an important gauge of Nike’s turnaround efforts, a year into Hill’s tenure as CEO. Nike has tried to focus more on the needs of athletes, offload sneakers like Dunks and Air Force 1s that people got bored of, and turn its e-commerce platform into a higher-end shopping destination.
David Bartosiak, a stock strategist at Zacks, said in an email that Wall Street’s focus would likely be on Nike’s margins, as it deals with tariffs, and higher input and logistics costs.
“If Nike proves the reset is working, meaning margins stabilizing, orders improving, product mix shifting, then we could see a relief rally,” he said. “But if guidance is weak or markdowns continue, this one could get ugly fast.”
-Bill Peters
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09-30-25 1641ET
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