Fashion
Nike’s turnaround gains traction, but China and tariffs weigh on outlook
By
Reuters
Published
October 1, 2025
Following its stronger-than-expected Q1 results, Nike’s leadership and analysts discussed the road ahead amid inventory cleanup, challenges in China, and a renewed focus on sports.
Nike CEO Elliott Hill vowed to return the company to its sportswear roots when he took the helm last year in a highly anticipated change, and his efforts are bearing fruit — but a sluggish recovery in China and uncertainty over tariffs remain a drag on the company.
The company, which reported a surprise rise in quarterly revenue, has aggressively cleared out aged inventory, as well as some lifestyle product lines, to focus on more innovative shoes centered on sport.
“Nike is in the early innings of its turnaround and momentum is building,” said Jefferies analyst Randal Konik in a note.
The company said on Tuesday that its order book for spring was up year-over-year, driven by its sports category, as launches such as the Vomero, Pegasus, and P-6000 running shoes bring back customers.
Running, training, and basketball categories each reported double-digit growth in the quarter in North America, enabling a return to sales growth in the region after about a year.
“We think retailers — like the combined Foot Locker and Dick’s Sporting Goods — are reacting positively to Nike’s new running shoe lineup,” said Morningstar analyst David Swartz.
Nike’s shares were up about 3% in premarket trading on Wednesday as investors welcomed a 2% reduction in inventory.
“I am very pleased with inventory levels. Units are down more than dollars as inflation starts to come through. They have largely cleared through older franchises,” said Mari Shor, senior equities analyst at Columbia Threadneedle.
The pressure points
Progress will not be linear, Hill warned on a post-earnings call, with tariffs now expected to cost about $1.5 billion — versus the $1 billion Nike estimated previously — and weigh on margins already strained by heavy discounting to clear stock.
China remains a challenging market, with intense competition from lower-priced local brands such as Anta and Li-Ning, which further exacerbates a weaker economic recovery and a struggling wholesale business.
“We can invest to keep the marketplace clean and healthy, but it’s an expensive operating model if sell-throughs don’t improve to the levels that we need to see on a season-in, season-out basis,” said Chief Financial Officer Matthew Friend on a post-earnings call.
Customer engagement also remains weak in the company’s digital business, with revenue falling 12% in the quarter. Hill said the global digital business was still working to find solid ground, with the company paring back promotions on the channel.
Nike’s direct-to-consumer business is not expected to return to growth in fiscal 2026, executives said, as the unit recovers from steep discounts used to clear out inventory of some of its classic labels, such as the Air Force One and Air Jordans.
“I originally thought that Nike would be further along. I was looking at this fall as the real breakout point, but it’s clearly not going to happen until calendar ’26,” said Swartz.
FashionNetwork.com with Reuters
© Thomson Reuters 2025 All rights reserved.
Total apparel shipments fell by 2.66 per cent year on year to $425.44 million in January 2026, compared with $437.07 million in the corresponding month of 2025. The performance underscored uneven global demand conditions that continue to influence sourcing patterns and order flows for Sri Lankan manufacturers.
Sri Lanka’s apparel exports declined 2.66 per cent YoY to $425.44 million in January 2026 amid weak global demand.
Shipments to the US and EU softened, while the UK remained stable with slight growth.
Other markets saw sharper contraction.
JAFF highlighted DCTS benefits and tariff changes while suggesting diversification and efficiency to sustain competitiveness.
Exports to the United States, the country’s largest market, decreased by 2.73 per cent to $165.11 million, while shipments to the European Union excluding the United Kingdom, declined by 1.93 per cent to $126.99 million. In contrast, exports to the UK remained broadly stable, rising marginally by 0.23 per cent to $61.71 million. Apparel shipments to other markets dropped more sharply by 6.07 per cent to $71.63 million.
JAAF noted that the UK’s steady performance offers a constructive signal for the sector, particularly as the revised Developing Countries Trading Scheme (DCTS), effective January 1, 2026, is expected to enhance sourcing flexibility and strengthen Sri Lanka’s competitive position in the British market.
The industry body also highlighted the introduction of a uniform 10 per cent temporary tariff in the US market as a relatively supportive development, reducing the impact of previously higher country-specific rates and providing greater short-term pricing predictability for exporters.
Commenting on the January outcome, JAAF said the moderate decline reflects ongoing volatility in global demand. The association emphasised that the industry remains committed to reinforcing resilience through market diversification, product innovation and operational efficiency, while collaborating with stakeholders to sustain Sri Lanka’s standing as a reliable apparel sourcing destination.
Fibre2Fashion News Desk (KUL)
Profitability remained robust despite a more challenging trading backdrop. Group EBIT stood at €913.4 million, broadly stable year on year (YoY), translating into a 29.2 per cent margin versus 29.5 per cent in FY24. Net profit reached €626.7 million compared with €639.6 million a year earlier, reflecting higher net financial expenses, while maintaining a 20 per cent margin.
Moncler has reported revenues of €3.13 billion (~$3.69 billion) in FY25, up 3 per cent at constant exchange rates, with net profit of €626.7 million (~$739.5 million).
Asia led regional growth, while DTC channels strengthened across brands.
Q4 revenues rose 7 per cent, driven by robust Moncler and Stone Island performance, as the group prepares for continued investment and leadership transition.
Regionally, the group recorded strong momentum in Asia, where revenues rose 7 per cent at constant exchange rates to €1.42 billion, supported by demand in China and Korea and a recovery in tourist flows. The Americas increased 5 per cent to €391.1 million, whereas Europe, Middle East and Africa (EMEA) declined 3 per cent amid subdued tourism-related traffic, Moncler said in a press release.
Channel performance highlighted the continued shift towards direct engagement. Moncler’s direct-to-consumer (DTC) revenues rose 4 per cent to €2.36 billion, accounting for nearly 87 per cent of brand sales, while wholesale declined 4 per cent as the group continued to enhance distribution quality. Stone Island’s DTC channel expanded 11 per cent to €226.4 million, whereas wholesale decreased 4 per cent.
The group’s financial position strengthened further, with net cash reaching €1.46 billion at year-end after dividend payments of €353.2 million. The board proposed a dividend of €1.4 per share and approved the consolidated sustainability statement.
Remo Ruffini, chairman and CEO of Moncler, said: “Moncler and its board of directors wish to express their most sincere thanks to Gabriele Galateri di Genola for his dedication and the highly valuable contribution he has made throughout his more than ten-year term of office. His significant experience, the vision developed over many years in senior leadership positions at leading industrial and financial organisations, as well as his constant commitment to good governance, have represented a key point of reference for our work. With gratitude, we extend our best wishes to Gabriele Galateri di Genola for the future.”
In the fourth quarter (Q4), the group delivered accelerated momentum, with revenues rising 7 per cent at constant exchange rates to €1.29 billion (~$1.52 billion). Moncler brand revenues reached €1.17 billion, up 6 per cent, while Stone Island posted €123.1 million, surging 16 per cent with double-digit growth across all regions.
Moncler’s DTC channel advanced 7 per cent despite a demanding comparable base in the quarter, supported by Asia and the Americas, while wholesale returned to growth, rising 2 per cent. Stone Island recorded broad-based acceleration, with DTC revenues increasing 16 per cent and wholesale climbing 17 per cent, partly reflecting delivery timing shifts from the previous quarter.
Looking ahead, the group emphasised continued investment in brand development and organisational strengthening, including the appointment of Leo Rongone as group chief executive officer from April 2026, as it seeks to sustain long-term growth and value creation.
Fibre2Fashion News Desk (SG)
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