Moody’s announced on Nov. 13 that it had downgraded Nike’s senior unsecured notes rating to A2 from A1 and maintained a stable outlook.
The agency cited persistent cost pressures – including elevated tariffs and freight expenses – alongside a recent 10 percent drop in revenue and a 42 percent decline in EBIT in fiscal 2025.
Key metrics & outlook
In fiscal 2025, Nike experienced a 10 percent revenue decline accompanied by a 42 percent drop in EBIT. Looking ahead, Moody’s projects that the company’s adjusted debt/EBITDA ratio will reach approximately 2.5× in FY 2026 before improving to the mid-1× range in FY 2027. The downgrade reflects what Moody’s describes as “diminished cash-flow and higher leverage compared to [Nike’s] historical credit profile.”
Why it matters
For Nike, the rating cut signals investor concern about recovery timing in core markets and margin restoration. This development may affect Nike’s borrowing costs, supplier confidence and ability to invest aggressively in product innovation and brand campaigns.
Zoom out
In the broader sporting goods ecosystem, the move has ripple effects. Retailers, brands and suppliers operating in the same value chains – including peers such as Adidas, Puma and Under Armour — may face elevated scrutiny on credit and supply-chain resilience. Also, with Nike tightening financial flexibility, competitors could gain share in certain product segments.
Between strengths and caveats
Nike retains substantial brand equity, global scale and strong liquidity. Moody’s has kept a “stable” outlook, signalling confidence in a medium-term recovery. However, the agency warns that improvement will be gradual and depend on Nike’s turnaround and ability to restore margin strength.
The bottom line
Nike’s rating downgrade from A1 to A2 by Moody’s is a red flag for the brand’s near-term financial strength – including its borrowing freedom and flexibility. For the sporting goods industry, the decision underscores mounting challenges: margin pressure, cost inflation, competitive threats and the importance of agility in product and channel strategy.
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