S&P believes Nike will require “multiple years to regain the market share lost to both apparel and footwear competitors” and return to its “historical levels of profitability.”
S&P Global Ratings, as our colleagues at the American edition of SGI are also reporting, has lowered its ratings on Nike, its issuer credit rating included, by one notch – from AA- to A+.
S&P believes Nike will require “multiple years to regain the market share lost to both apparel and footwear competitors” and return to its “historical levels of profitability.” The company’s “sizable cash position masks the material underperformance and weakening of the company’s core credit metrics,” the agency continues. According to Nike’s latest results, for Q4 2025, cash and equivalents and short-term investments amounted to $9.2 billion, down by $2.4 billion year-on-year.
“On top of the turnaround,” says S&P, “Nike also faces new and meaningful cost headwinds from tariffs, particularly affecting footwear imported into the U.S.” The estimated gross incremental cost increase of the tariffs should be about $1 billion, or 75 basis points to gross margin.
Nike hopes to mitigate the effects by overhauling its supply chain, collaborating with retailers and cutting its costs throughout fiscal 2026. It is also endeavoring to reduce its footwear imports from China to the US from 16 percent to a high single-digit percentage by the end of fiscal 2026.
