Nike sends hard-nosed message on prices

Todd Campbell

October 2, 2025 8 min read

Nike is under significant pressure to raise sneaker prices because of President Trump's tariff policy.

The company has always been front and center in athletic apparel. Its deep roots in running shoes stretch back to the 1960s, when track and field athlete Phil Knight founded it, and its high-profile relationship with basketball star Michael Jordan has won it a loyal following and turned some of its sneakers into coveted collector's items, fetching thousands of dollars or more.

For instance, the Michael Jordan "Dynasty Collection," including six sneakers worn by Jordan in eight separate playoff seasons, fetched a remarkable $8 million in a Sotheby's auction in 2024.

Nike at a glance:

Annual revenue in fiscal 2025: $46.3 billion, down from $51.3 billion in FY2024.
Brands owned: Nike, Jordan, and Converse.
Number of employees: 77,800

Nike's brand remains a go-to for sports stars and athletes of all ages decades later. Still, it's lost some luster since Covid, as newer footwear brands, including On and Hoka, have emerged. Styles have shifted, resulting in robust sales at rivals, including Asics, which resale platform StockX says is the fastest-growing sneaker brand in the first half of 2025, thanks to Gel-1130.

It hasn't helped Nike that stiff new tariffs enacted this year are creating a major problem for the footwear industry, crimping profit, and forcing companies, including Nike, to make pricing decisions likely to frustrate shoe shoppers.

About 50% of Nike's footwear is made in Vietnam, and a little less than 20% is made in China. Despite trade deals, both countries face stiff increases in tariffs this year.

Tariffs on Chinese imports into the U.S. settled at 30% while Vietnam's tariffs are 20% following a trade agreement in August. Those tariffs land on pre-existing tariffs, so they hit Nike particularly hard.

On Nike's earnings call on Sept. 30, CEO Elliott Hill said:

New reciprocal tariffs are stacked on top of the mid-teens rate NIKE already paid on imports. ... With the new rates in effect today, we now estimate the gross incremental cost to NIKE on an annualized basis to be approximately $1.5 billion, up from the $1 billion we shared 90 days ago.

Nike's CFO Matthew Friend said on the earnings call in May that customers would have to share the burden,

We have implemented a surgical price increase in the United States with phased implementation beginning in fall '25.

Unfortunately, Nike recently made another decision that will likely disappoint shoe shoppers.

Nike shoppers are paying more for their sneakers.Emily Elconin/Bloomberg via Getty Images

Nike fans feel the pinch

Footwear is somewhat of a discretionary purchase, given that consumers wear their sneakers longer when times are tough or trade down, buying less pricey options.

Over the past few years, the U.S. economy has been doing okay, given low unemployment, rising gross domestic product, and wages that have generally outpaced inflation since inflation's peak in 2022.

U.S. footwear industry at a glance:

Market size: $113.7 billion in 2024
Footwear sold: 2.5 billion pairs of shoes
Tariffs paid previously: Approx. $3 billion industrywide annually
Tariffs estimated in the future: Approx. $5 billion annually

Source: Footwear Distributors and Retailers of America ( FDRA )

That's helped support demand for higher-end sneakers, including Nike. Nike isn't a luxury brand but focuses on quality and innovation, so its sneakers are more expensive than some rivals.

For example, its popular Nike Vomero 18 is sold for $155, the Airmax fetches over $100, and Air Jordans can go for over $200 on its website.

Unfortunately, inflation has started climbing again, partly because of tariffs, which could pressure shoppers' budgets.

The Consumer Price Index showed inflation rose 2.9% year-over-year in August, up from 2.3% in April before most tariffs took effect. Footwear prices jumped 1.4% year-over-year, the most significant increase in 17 months, with women's shoes spiking 2.8%, the most in two and a half years , according to FDRA.

The increased costs caused by tariffs have most footwear companies working overtime to protect their profits. As a result, companies like Nike are negotiating lower prices from suppliers and, unfortunately, increasing prices.

Nike's recent struggles, evidenced by declining revenue over the past few years, have boxed it in.

Elliott Hill was Nike's President of Consumer and Marketplace, leading all commercial and marketing operations for Nike and Jordan Brand, before retiring in 2020. In October 2024, he was appointed CEO to get Nike back on track.

As part of that effort, Nike is cleaning up its inventory, cutting prices to retailers, and discounting items through its brick-and-mortar stores and online store.

This has created more bargains for shoppers; however, those deals will be harder to find as excess inventory shrinks.

As part of its restructuring, Nike has said it will return to being a "full-price" footwear company.

"When we get into the second half of fiscal year '26, we expect to be in a clean marketplace, a healthy marketplace. And so that business in the second half will be more full price," acknowledged Matthew Friend in May. "We believe the Win Now actions are the right actions to reposition NIKE as a full-price brand in a healthy market."

In its call this week, Friend reiterated the pricing strategy for its direct-to-consumer business,

"We continue taking steps to reposition NIKE Digital as a full-price business."

Nike's financials face a stiff headwind

According to the FDRA, the footwear industry imports 99% of the products sold in the U.S. annually. As a result, companies like Nike are on the hook for significantly higher costs due to tariffs following recent trade deals, including with Vietnam.

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In its May earnings call, Nike said tariffs would increase costs by $1 billion, prompting management's comments that prices would head higher beginning this fall.

Unfortunately, that billion-dollar figure was too optimistic. When the dust settled, updated number crunching pegged the hit from tariffs to be 50% larger, totaling $1.5 billion, creating a gross margin headwind in fiscal '26 of 1.2%, up from prior predictions of 0.75%.

The drag comes even as Nike struggles to reignite sales growth. In its most recently reported quarter, revenue increased by just 1% to $11.7 billion. For perspective, its sales totaled $12.9 billion in the same quarter of 2023. For the full fiscal year, Wall Street expects Nike's sales to total $46.7 billion.

Nike fiscal sales by year:

2026 (est): $46.7 billion
2025: $46.3 billion
2024: $51.4 billion
2023: $51.2 billion
2022: $46.7 billion

Source: Nike 10-K filings with the SEC. The 2026 estimate is the Wall Street consensus.

While full-year gross margins are expected to be down 1.2% this year, margins will be hit particularly hard this quarter.

Nike's guidance for its fiscal second quarter (calendar quarter ending November) is for gross margin to decline by 3% to 3.75%, including a net headwind of 1.75% from new incremental tariffs.

Nike rivals also increase prices

To be sure, tariffs aren't only taking a toll on Nike. Its rivals are in the same boat, given how many rely on Asia for manufacturing.

Hoka, a popular manufacturer of premium sneakers, is also increasing prices.

"We implemented selective initial price increases, which went into effect on July 1," said Hoka CFO Stephen Fasching. "One of our mitigating levers is price adjustments."

The uncertainty associated with tariffs was enough to force Skechers to retract its full-year financial guidance earlier this year, ahead of its acquisition by 3G Partners.

Adidas makes half its footwear in Asia. Its CEO told the BBC in June that tariffs, "will directly increase the cost of our products for the US".

Wall Street weighs in on Nike

Nike's stock price has fallen sharply over the past few years as sales growth has stalled. It has tumbled 52% since 2021, including an 8.5% drop over the past 12 months.

The company's turnaround plan may be taking hold, given that last quarter's 1% growth was the first year-over-year quarterly growth notched by the company since late 2023.

Still, Wall Street analysts remain mixed in their outlook.

Morgan Stanley analyst Alex Straton kept an equal-weight rating on the stocks, writing in a note to clients:

We recognize the positive [near term] rate-of-change story, but this is balanced by ourstill-skeptical medium- to longer-term view... The print did little to solve our ongoing skepticism that NKE can return to its priorgrowth & profitability... Incremental tariffs present a greater go-forward GM headwind.

Bank of America is more optimistic, with a buy rating and $84 price target, writing:

Sales improvement provides evidence that plan is working... Better than expected wholesale sales gives us increased confidence that the turnaround is well underway.

This story was originally reported by TheStreet on Oct 2, 2025, where it first appeared in the Retail, Shopping Malls, Chain Stores News & Analysis section. Add TheStreet as a Preferred Source by clicking here.