Nike Just Did It—Turned $1.5 Billion Pain Into Performance

Core Insights - Nike Inc has successfully exceeded Wall Street expectations, demonstrating that its turnaround strategy is effective despite facing a $1.5 billion annual cost from tariffs, which is a 50% increase from previous estimates [1][2] - The impact of tariffs represents only about 3% of last year's revenue of $46.3 billion, indicating that the company is managing costs by shifting production sites [2] Financial Performance - Nike reported a 7% growth in wholesale to retailers, highlighting the importance of rebuilding relationships and focusing on core product lines, particularly performance shoes [3] - Gross margins decreased from 45.4% to 42.2% due to higher discounts and tariffs, but the market remains focused on the company's turnaround trajectory [4] Strategic Focus - The company is prioritizing performance products over casual wear, which has contributed to revenue growth across most regions, except for a 10% decline in Greater China [3] - Leadership under CEO Elliott Hill emphasizes that while structural challenges exist, they do not hinder the overall game plan for recovery [2][4] Investor Sentiment - Investors view Nike's earnings as a sign that tariffs are a minor obstacle rather than a significant barrier, with the company showing resilience through wholesale growth and a renewed focus on performance products [5]