Credit rating agency Moodyâs Ratings has downgraded several of global footwear and apparel retailer Nikeâs debt ratings.
In downgrading Nikeâs senior unsecured debt by one notch on Wednesday, Moodyâs analysts cited cost pressures from higher tariffs among other factors in the agencyâs decision.
The rating agency simultaneously shifted its outlook on Nikeâs still high-grade ratings from negative to stable.
Nike has experienced stagnant financial performance recently as newer brands such as On and Hoka have chipped away at the sportswear juggernautâs market share.
The companyâs revenue slipped by 10 percent in its fiscal 2025, while its earnings before interest and taxes declined 42 percent, according to Moodyâs. It has revamped its product lineups while clearing out excess products in its lifestyle-focused franchise, Moodyâs analysts noted.
Moodyâs expects Nikeâs profit margins will recover over time, but slowly due to the impact of tariffs, as well as Nikeâs cautious discretionary spending and heightened market competition from new and established rivals.
These and other factors should âresult in diminished cash flow and higher leverage compared to (Nikeâs) historical credit profile,â Moodyâs Wednesday report noted.
Nikeâs cash flow generation should âremain constrained by higher capital expenditures and its sizeable dividend, which has increased over the past few years,â the report added.
The analysts forecast Nikeâs adjusted debt-to-EBITDA to increase to 2.5x in fiscal 2026 before falling to mid-1x in fiscal 2027.
By Matt Tracy
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