Risk factor changes · NKE

What changed in Nike's risk factors

Item 1A (Risk Factors) of Nike's FY2026 10-K compared with its FY2025 10-K, sentence by sentence.

Newer: 10-K filed 2026-07-15 · Older: 10-K filed 2025-07-17

New in the latest 10-K 27

• The markets in which we compete are undergoing continued technological innovation and disruption, including the increased use of artificial intelligence ( AI ) and machine learning by consumers, competitors, retailers and digital commerce platforms.
• If we cannot innovate, enhance our NIKE Direct platforms, digital services and experiences, or leverage AI-enabled and other new technologies across our direct to consumer and wholesale operations at a pace consistent with consumer expectations and industry developments, our competitive position, consumer engagement, demand for our products, services and experiences, and results of operations could be adversely affected.
• For example, the Philip H.
• Responding to such expectations and complying with such laws, regulations or policies, or any failure or perceived failure to satisfy them, including as a result of good-faith interpretations that may differ from those taken by authorities in relevant jurisdictions, could increase the costs of operating our businesses, including by requiring us to conduct additional due diligence or make additional investments in facilities and equipment, reduce the demand for our products and impact the prices we charge our customers, or result in legal, reputational and operational risks, any or all of which could adversely affect our results of operations and financial condition.
• Execution of these strategies and achievement of our goals and targets are subject to risks and uncertainties, many of which are outside of our control, including regulatory developments; the availability and cost of raw materials and renewable energy; unforeseen production, design, operational and technological difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis; customer acceptance of sustainable products or supply chain solutions; and the actions of competitors and competitive pressures.
• Risks presented by pandemics and other public health emergencies include, but are not limited to, macroeconomic deterioration, supply chain and distribution disruption, reduced retail traffic and consumer demand, cancellation or postponement of sports seasons and sporting events, wholesale customer distress and other disruption and volatility in global financial markets.
• Risk Factors, any of which could have a material effect on us. 2026 FORM 10-K 12 Table of Contents Business and Operational Risks Failure to maintain our reputation, brand image and culture could negatively impact our business.
• We could be adversely impacted if we fail to maintain or enhance our brand image and reputation.
• In addition, advances in technology, including AI-enabled tools, digital commerce platforms and data analytics, may accelerate shifts in consumer preferences and shorten the windows in which we can identify, design and market products responsive to those preferences.
• If we are unable to use these tools effectively, our products may fail to meet evolving consumer demand.
• Failure to accurately forecast consumer demand has in the past led and could in the future lead to excess inventories or inventory shortages, which has in the past resulted and could in the future result in decreased operating margins, reduced cash flows and harm to our business.
• Changes in consumer preferences or spending habits, shifts in fashion or athletic trends, a decline in the perceived desirability or cultural relevance of our brands or products, or increased competition could result in lower-than-expected demand and elevated inventory levels.
• To remain competitive, we may need to develop, integrate and scale AI-enabled search, discovery, personalization, recommendation and other digital commerce capabilities, including through third-party tools and platforms.
• If we are unable to adapt our NIKE Direct platforms and digital experiences to changes in consumer shopping behavior, including increased use of AI-enabled search, comparison-shopping, agentic shopping or other third-party technologies to discover, evaluate or purchase products, our ability to drive traffic, engage consumers and compete effectively could be adversely affected.
• If we fail to continue to effectively scale and adapt our digital platforms to accommodate consumer demand, our business may be subject to interruptions, delays or failures and consumer demand for our products and digital experiences could decline.
• Moreover, as we develop, deploy and integrate AI, including internally developed and third-party AI tools, into our operations, digital platforms and business processes, we may face increased cybersecurity, privacy, data governance, operational and compliance risks, including risks related to unauthorized use or misuse of AI tools, data loss or unauthorized access to or disclosure of personal, confidential or proprietary information, inaccurate, biased or unintended outputs, including in certain employment-related uses, system vulnerabilities and rapidly evolving laws, regulations and standards relating to AI, privacy, cybersecurity and data use.
• In addition, threat actors may use AI to increase the speed, scale and sophistication of cyberattacks, including phishing, impersonation, credential theft, exploitation of known or previously unknown software vulnerabilities and other automated, targeted or coordinated attacks against our systems or those of our vendors and other third parties.
• Business, "Manufacturing" for additional information.
• Declines in store traffic, changes in consumer shopping behavior, shifts to digital commerce, local safety concerns or reduced profitability of certain store formats or regions could adversely affect our store strategy, lease decisions and operating results.
• The principal materials used in our footwear and apparel products, as described under Item 1.
• Business "Manufacturing," are generally available to manufacturers locally or in the countries where our manufacturing takes place.
• We may be subject to liability if third parties successfully claim we infringe their intellectual property rights.
• These laws, together with a growing patchwork of laws and regulations governing AI, automated decision-making, targeted advertising, profiling and consumer protection, impose additional obligations regarding the handling of personal data and other information, and these requirements continue to evolve.
• In January 2026, the OECD introduced a "side-by-side" framework under Pillar Two, largely exempting U.S. headquartered companies from the application of certain Pillar Two provisions.
• However, these provisions will need to be adopted into law by each of the OECD member countries to be effective.
• Changes in our credit ratings or macroeconomic conditions may affect our liquidity, increasing borrowing costs and limiting our financing options.
• The market price of our Class B Common Stock has experienced volatility, and the scope and time horizon of any guidance we provide may change from period to period, each of which could contribute to further volatility in our stock price.

Reworded 129

Removed words are struck through; added words are highlighted.

• The risks and uncertainties are detailed from time to time in reports filed by NIKE with the SEC, including reports filed on Forms 8-K, 10-Q and 10-K, and include, among others, the following: risks relating to our business strategy, strategy and growth initiatives, including, but not limited to, risks related to an increased focus on sport and rebalancing of our product and channel mix; intense competition among designers, marketers, distributors and sellers of athletic or leisure footwear, apparel and equipment for consumers and endorsers;
• NIKE's ability to successfully innovate and compete in various categories; categories and geographies; new product development and innovation; demographic changes; changes in consumer preferences and channel mix; popularity of particular designs, categories of products and sports; seasonal and geographic demand for NIKE products; difficulties in anticipating or forecasting, and responding to changes in consumer preferences, consumer demand for NIKE products, changes in channel mix and the various market factors described above; the size and growth of the overall athletic or leisure footwear, apparel and equipment markets; general risks associated with operating a global business, including, without limitation, exchange rate fluctuations, inflation, import duties, quotas, sanctions, political and economic instability, conflicts and terrorism; the potential impact of new and existing laws, regulations or policies, including, without limitation, those relating to tariffs, import/export, trade, taxes, wages, labor and immigration; international, national and local political, civil, economic and market conditions, including volatility and uncertainty regarding inflation and interest rates; difficulties in implementing, operating and maintaining NIKE's increasingly complex information technology systems and controls, including, without limitation, the systems related to demand and supply planning and inventory control; interruptions in data and information technology systems; consumer data security; risks related to our sustainability strategy; fluctuations and difficulty in forecasting operating results, including, without limitation, the fact that advance orders may not be indicative of future revenues due to changes in shipment timing, the changing mix of orders with shorter lead times, and discounts, order cancellations and returns; the ability of NIKE to sustain, manage or forecast its growth and inventories; the size, timing and mix of purchases of NIKE's products; products and other factors referenced herein; increases in the cost of materials, labor and energy used to manufacture products; the ability to secure and protect trademarks, patents and other intellectual property; product performance and quality; customer service; adverse publicity and an inability to maintain NIKE's reputation and brand image, including without limitation, through social media or in connection with brand damaging events; the loss of significant customers or suppliers; dependence on distributors and licensees; business disruptions; increased costs of freight and transportation to meet delivery deadlines; increases in borrowing costs due to any decline in NIKE's debt ratings; changes in business strategy or development plans; the impact of, including business and legal developments relating to, climate change, extreme weather conditions and natural disasters; litigation, regulatory proceedings, sanctions or any other claims asserted against NIKE; the ability to attract and retain qualified employees, and any negative public perception with respect to key personnel or our corporate culture, values or purpose; the effects of NIKE's decision to invest in or divest of businesses or capabilities; health epidemics, pandemics and similar outbreaks; and other factors referenced or incorporated by reference in this Annual Report and other reports.
• Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 2025 2026 FORM 10-K 9 Table of Contents Economic and Industry Risks Global economic conditions have in the past had and could in the future have a material adverse effect on our business, operating results and financial condition.
• Declines in consumer spending have in the past resulted in and may in the future result in reduced demand for our products, increased inventories, reduced orders from retailers for our products, increased order cancellations or returns, lower revenues, higher discounts and lower gross margins.
• We conduct transactions transact in various currencies, which creates exposure to fluctuations in foreign currency exchange rates relative to the U.S.
• Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) has had and could in the future have a material adverse effect on our costs, gross margins and profitability.
• In addition, supply Supply chain issues caused by factors, including geopolitical conflicts, tariffs and trade policies and pandemics, have impacted and may in the future impact the availability, pricing and timing for obtaining commodities and raw materials.
• If retailers of our products experience declining revenues or experience difficulty obtaining financing to purchase our products, this could result in reduced orders for our products, orders, order cancellations, late retailer payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts expense and increased bad debt expense.
• The athletic footwear, apparel and equipment industry is highly competitive both in the United States and worldwide. competitive.
• We compete with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies, private label brands offered by major retailers and various other large companies that have diversified lines of athletic and leisure footwear, apparel and equipment.
• We also compete with other companies for the production capacity of contract manufacturers that produce our products. manufacturers.
• These, in addition to ongoing rapid changes in technology (including marketing and advertising technology) and artificial intelligence ("AI"), a reduction in barriers to starting new footwear and apparel companies and an increase in the number of such companies (some of which may be able to react more nimbly to changes in consumer preferences) and changes in consumer preferences in the markets for athletic and leisure footwear, apparel, and equipment, services and experiences, constitute significant risk factors in our operations.
• In addition, the competitive nature of retail, including shifts in the ways in which consumers shop, constitutes a risk factor implicating affecting our NIKE Direct and wholesale operations.
• If we do not adequately and timely anticipate and respond to our competitors, our costs may increase, demand for our products may decline, possibly significantly, or we may need to reduce wholesale or suggested retail prices for our products. 2025 2026 FORM 10-K 10 Table of Contents Economic factors beyond our control, and changes in the global economic environment, including fluctuations in and uncertainty regarding inflation and currency exchange rates, could result in lower revenues, higher costs and decreased margins and earnings.
• Government shutdowns or the risk of government shutdowns, as well as the impact or expected impact of elections, both in the United States and in other countries around the world, countries, may also increase volatility.
• Dollar value relative to other international currencies.
• Foreign currency fluctuations have adversely affected and could continue to have an adverse effect on adversely affect our results of operations and financial condition.
• We extend credit to our customers based on an assessment of a customer's their financial condition, generally without requiring collateral.
• In the past, some customers have experienced financial difficulties up to and including bankruptcies, which have had an adverse effect on adversely affected our sales, our ability to collect on receivables and our financial condition.
• Climate change, extreme weather conditions and natural disasters may have an adverse impact on our business and results of operations.
• Extreme weather conditions and other natural or manmade disasters in the areas in which our retail stores, suppliers, manufacturers, customers, distribution centers, offices, headquarters and vendors are located could adversely affect our operating results and financial condition.
• Moreover, natural disasters such as earthquakes, hurricanes, wildfires, tsunamis, floods or droughts, whether occurring in the United States or abroad, and their related consequences and effects, including including, but not limited to, energy shortages and public health issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our vendors, manufacturers and other suppliers or have in the past resulted in, and in the future could result in, economic instability that may negatively impact our operating results and financial condition.
• In particular, if a natural disaster or severe weather event were to occur in an area in which we or our suppliers, manufacturers, employees, customers, distribution centers or vendors are located, our continued success would depend, in part, on the safety and availability of the relevant personnel personnel, facilities, machinery and facilities equipment and proper functioning of our or third parties' computer, network, telecommunication and other systems and operations.
• In addition, a natural disaster or severe weather event could negatively impact retail traffic to our stores or stores that carry our products and could have an adverse impact on consumer spending, any of which could in turn result in negative point-of-sale trends for our merchandise.
• The diversity of locations in which we operate, our operational 2025 FORM 10-K 11 Table of Contents size, disaster recovery and business continuity planning and our information technology systems and networks, including the Internet and third-party services 2026 FORM 10-K 11 Table of Contents ("Information Technology Systems"), may not be sufficient for all or for concurrent eventualities.
• For example, our World Headquarters Knight Campus is located in a seismic zone, which is at a higher risk for earthquakes and the related consequences or effects.
• Globally, the expectations of regulators and other key stakeholders on regulations regarding corporate responsibility and sustainability-related topics continue to evolve and diverge, and our ability to meet these requirements and expectations could negatively impact our operating results and financial condition.
• Corporate responsibility and sustainability-related topics, including climate change and diversity, as well as companies actions and initiatives on such issues, have received continue to receive significant attention from a wide range of stakeholders. stakeholders, who may have varied, evolving and sometimes conflicting expectations regarding our policies, practices, disclosures, goals and targets.
• For example, In addition, federal, state or state, local and foreign governmental authorities in various countries are implementing, have proposed adopted or proposed, and are likely to continue to adopt or propose, legislative and regulatory initiatives regarding corporate responsibility and sustainability-related matters, ranging from the disclosure of corporate greenhouse gas emissions to limitations on corporate diversity programs, among others. others, and these requirements may differ or conflict across jurisdictions, increasing the complexity and cost of compliance.
• Although we have announced corporate responsibility and sustainability-related goals and targets, there can be no assurance that we will be able to execute our strategies or achieve our goals within the currently projected costs and expected timeframes, or that our stakeholders will agree with our goals, targets or strategies, or be satisfied with our efforts to implement them.
• As a result, there is no assurance that we will be able to adequately meet stakeholder expectations, successfully execute our strategies strategies, or maintain or achieve our any corporate responsibility and or sustainability-related goals, target, goal or commitments, which could damage our reputation and customer and other stakeholder relationships and have an adverse effect on our business, results of operations and financial condition.
• These events have led to and could again lead to adverse impacts to our global supply chain, factory cancellation costs, store closures, and a decline in retail traffic and discretionary spending by consumers 2025 FORM 10-K 12 Table of Contents and, in turn, materially impact our business, sales, financial condition and results of operations as well as cause a volatile effective tax rate driven by changes in the mix of earnings across our jurisdictions.
• Negative claims or publicity involving us, our culture and values, our products, services and experiences, consumer data, or any of our key employees, endorsers, sponsors, suppliers or partners could seriously damage our reputation and brand image, regardless of whether such claims are accurate.
• For example, while we require our suppliers of our products to operate their business in compliance with applicable laws and regulations, we do not control their practices.
• However, lead times for many of our products make it more difficult for us to respond rapidly to new or changing product trends or 2025 FORM 10-K 13 Table of Contents consumer preferences.
• If we do not successfully market our products, if advertising and promotional costs increase or increase, if certain advertising networks are no longer available, or if we are unable to take advantage of technological advances in the marketplace, these factors could have an adverse effect on our business, financial condition and results of operations.
• We rely upon specialists in the fields of biomechanics, chemistry, exercise physiology, engineering, digital technologies, industrial design, sustainability and related fields, as well as research committees and advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists and other experts to develop and test cutting-edge performance products.
• While we strive to produce products that help to enhance athletic performance and reduce injury and maximize comfort, if we fail to introduce technical innovation in our products, consumer demand for our products could decline, and if we experience problems with the quality of our products (including the introduction of bias or inaccuracies in our products), we may incur substantial expense to remedy the problems and loss of consumer confidence. 2026 FORM 10-K 13 Table of Contents Our business is affected by seasonality, which could result in fluctuations in our operating results.
• However, the The mix of product sales may vary considerably from time to time or in the future as a result of strategic shifts in our business and seasonal or geographic demand for particular types of footwear, apparel and equipment and in connection with the timing of significant sporting events, such as the NBA Finals, Olympics or the World Cup, among others.
• However, as competition in our industry has increased, the costs associated with establishing and retaining such sponsorships and other relationships have increased, and competition to attract and retain high-quality endorsers has increased. intensified, including due to the growing influence of athletes' personal brands, the proliferation of athlete-led commercial ventures and a broader pool of competing brands seeking endorsement relationships.

Removed since the previous 10-K 28

• Our ability to meet the expectations and requirements of key stakeholders, particularly in light of rapid changes in regulations, interpretations of existing regulations or consumer preferences, could affect our business, operating results and financial condition, as well as our policies and procedures relating to corporate responsibility and sustainability-related matters.
• Compliance with such laws, regulations or policies, including any that may be adopted in the future, could increase the costs of operating our businesses, reduce the demand for our products and impact the prices we charge our customers, any or all of which could adversely affect our results of operations. in addition, various countries and regions have adopted or proposed laws, regulations and policies that diverge from, or potentially conflict with, those in other jurisdictions, which could increase the complexity of, and potential cost related to complying with, such regulations.
• Failure to comply with any legislation, regulation or policy, including as a result of making good faith interpretations that may differ from those taken by authorities in relevant jurisdictions, could potentially result in legal, reputational and operational risks.
• Moreover, our consumers, customers, employees and other stakeholders on products have diverse expectations, demands and perspectives on sustainability matters, which are subject to continued evolution.
• In order to meet their expectations, we may need to incur increased costs, including to conduct additional due diligence or make additional investments in facilities and equipment.
• These efforts may in turn impact the availability and cost of key raw materials used in the production of our products or the demand for our products, and could adversely impact our business, operating results and financial condition.
• We may not be able to meet the diverse expectations and demands of all of our stakeholders, which could harm our reputation, reduce customer demand for our products and services, and subject us to legal, reputational and operational risks.
• Any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to, such matters or to effectively respond to new or additional legal or regulatory requirements, could result in adverse publicity and adversely affect our business and reputation.
• Execution of these strategies and achievement of our goals and targets is subject to risks and uncertainties, many of which are outside of our control.
• In particular, with respect to our sustainability efforts, these risks and uncertainties include, but are not limited to, our ability to execute our strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of raw materials and renewable energy; unforeseen production, design, operational and technological difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis; compliance with, changes or additions to, and divergence in, global and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; diverging and evolving expectations and demands from key stakeholders, including as a result of changing regulations in their jurisdictions; and the actions of competitors and competitive pressures.
• Risks presented by pandemics and other public health emergencies include, but are not limited to: Deterioration in economic conditions in the United States and globally;
• Disruptions to our distribution centers, contract manufacturers, finished goods factories and other vendors impacting our planned inventory production and distribution, including higher inventory levels or inventory shortages in various markets;
• Supply chain impacts;
• Decreased retail traffic;
• Reduced consumer demand for, or spend on, our products;
• Cancellation or postponement of sports seasons and sporting events;
• Bankruptcies or other financial difficulties facing our wholesale customers; and Significant disruption of and volatility in global financial markets.
• Risk Factors, any of which could have a material effect on us.
• Business and Operational Risks Failure to maintain our reputation, brand image and culture could negatively impact our business.
• We could be adversely impacted if we fail to achieve any of these objectives.
• Our business is affected by seasonality, which could result in fluctuations in our operating results.
• Historically, revenues in the first and fourth fiscal quarters have slightly exceeded those in the second and third fiscal quarters.
• Moreover, as we integrate AI into our operations, there may be increased cybersecurity and privacy risks, including the risk of unauthorized or misuse of AI tools, and threat actors may leverage AI to engage in automated, targeted and coordinated attacks against our systems.
• The principal materials used in our footwear products natural and synthetic rubber, plastic compounds, foam cushioning materials, natural and synthetic leather, nylon, polyester and natural fiber textiles and polyurethane films are locally available to manufacturers.
• The principal materials used in our apparel products natural and synthetic fabrics, yarns and threads (both virgin and recycled), specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and repel rain and/or snow as well as plastic and metal hardware are also available in countries where our manufacturing takes place.
• We maintain business interruption insurance, but it may not adequately protect us from adverse effects caused by significant disruptions in our distribution facilities.
• These laws impose additional obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is stored.
• Other countries are also actively considering changes to their tax laws 2025 FORM 10-K 21 Table of Contents to adopt certain parts of the Inclusive Framework's proposals.

Source: SEC EDGAR filings, compared sentence by sentence by EdgarStack. Sentence matching is automated and may pair or split passages imperfectly; check the linked filings before relying on any passage. A software tool, not financial advice. Not affiliated with the U.S. Securities and Exchange Commission.