Nike plans price hikes to cope with tariffs, ease margin squeeze
Nike shares are outperforming a flat market in early trading on Thursday after news broke that it plans to push price hikes into effect by June 1.
The company has had a rough run. It’s down more than 50% over the last four years, while the S&P 500 is up almost 40% over that time. (Remarkably, it’s still tough to call the shares cheap as they’re trading at more than 30x expected earnings over the next year.)
President Trump’s tariffs were the latest bit of bad news to hit the stock, as Nike is a large importer of apparel and footwear.
In its last earnings call, the company estimated the impact of tariffs on imports from China and Mexico would contribute to a gross margin decline of between four and five percentage points, adding to a downward spiral in profitability. But price increases — if they don’t dissuade buyers — could ease that profit squeeze a bit.
President Trump’s tariffs were the latest bit of bad news to hit the stock, as Nike is a large importer of apparel and footwear.
In its last earnings call, the company estimated the impact of tariffs on imports from China and Mexico would contribute to a gross margin decline of between four and five percentage points, adding to a downward spiral in profitability. But price increases — if they don’t dissuade buyers — could ease that profit squeeze a bit.
