Nike Increases Prices for Its Apparel and Footwear

The price increases are attributable to an expected yearly tariff expense of $1.5 billion USD, which diminishes the company's gross margin.

Image: Unsplash

Nike is assertively utilizing its pricing authority across all primary categories as part of CEO Elliott Hill's extensive recovery strategy, approaching its one-year milestone. Data reveals that online footwear prices surged by 17% in the last year, while clothes prices ascended by 14%, indicating the brand's emphasis on full-price sales to counteract a phase of significant discounting and declining sales.

A significant component contributing to these rises is the external influence of international tariffs. Nike now anticipates that the increased trade taxes will impose a substantial cost of $1.5 billion USD this fiscal year, a considerable increase from prior forecasts, which will diminish its gross margin by more than one percentage point. Although the corporation expedited imports in early 2025 to alleviate some adverse effects, the repercussions are inevitable due to the predominance of production linked to Asian nations.

The technique, meanwhile, exhibits initial indications of success. Nike's wholesale revenue and running gear sales have experienced positive growth, suggesting that Hill's emphasis on revitalizing wholesale channels and prioritizing performance innovation is effective. The corporation is exercising selectivity, increasing pricing where its brand influence is most robust while eschewing the widespread discounting that adversely affected it in 2024. This methodical strategy seeks to guarantee enduring profitability and sustainable expansion.