"Nike yesterday revealed that it expects $1.5 billion in gross incremental costs, on an annualized basis, because of tariffs. That's a 50% increase from Nike's last estimate, provided in June, of $1 billion. Meanwhile, Nike's gross margin for its first fiscal quarter of 2026 decreased 320 basis points, in part due to "increased product costs, including new tariffs, and channel mix headwinds," EVP and CFO Matthew Friend said on a call with analysts."
"Given the magnitude and timing of the most recent rate increases, we now expect the net headwind in fiscal '26 to increase from approximately 75 basis points to 120 basis points to gross margin, he added. We are monitoring developments closely, and I remain confident in our ability to leverage our strengths, our scale and the deep experience of our leadership team to navigate through this disruption."
"Nike is still manufacturing in China, which has been the subject of some of the highest import tariffs under President Donald Trump's administration. About 16% of Nike's footwear imported into the U.S. comes from China and is therefore subject to a tariff of 30%. Nike has vowed to reduce its imports from China to the "high-single-digit range by the end of fiscal 2026.""
Nike increased its expected annualized gross incremental tariff costs to $1.5 billion, up from $1 billion in June, after reciprocal tariff rate increases for certain countries. Fiscal Q1 2026 gross margin declined 320 basis points, driven in part by increased product costs, new tariffs, and channel mix headwinds. Nike now anticipates a net gross‑margin headwind of about 120 basis points in fiscal 2026, up from a prior 75 basis points estimate. Nike continues manufacturing in China, where 16% of U.S.-imported footwear faces a 30% tariff, and plans to reduce China imports to the high-single-digit range by the end of fiscal 2026. Tariffs remain on Cambodia (19%), Indonesia (19%), and Vietnam (20%).
Read at Digiday
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