Nike (NKE) shares surged Friday after the company forecasted a smaller drop in both profit and sales for the current quarter, even as it braces for nearly $1 billion in tariff-related expenses while continuing to shift its supply chain away from China.
On Thursday, Nike said it expects sales to fall by mid-single digits this quarter, following a 12% revenue decline in its fiscal fourth quarter ended May 31.
Gross margins contracted by 440 basis points, or 4.4%, in the fourth quarter and are projected to decline another 350 to 425 basis points in the current quarter.
Nike stock rose 15.2% Friday, reducing its year-to-date loss to under 5%. Back in early April, the stock had dropped 30% in 2025 alone.
“While our financial results are in line with our expectations, they are not where we want them to be. Moving forward, we expect our business to improve as a result of the progress we’re making,” CEO Elliott Hill said in the release.
During Thursday’s earnings call, Nike CFO Matthew Friend said newly enacted U.S. tariffs “represent a new and meaningful cost headwind.” The company anticipates a 100 basis point hit to gross margins because of these tariffs.\
Friend added the company sees a “gross incremental cost increase to Nike of approximately $1 billion,” adding, “We intend to fully mitigate the impact of these headwinds over time.”
As part of its broader supply chain strategy, Nike announced plans to reduce its manufacturing dependence on China. Currently, Chinese suppliers make up about 16% of the shoes Nike imports into the U.S., but the company said it aims to lower that figure to the “high single-digit range” by the end of this fiscal year. Nike also plans a “surgical price increase” in the U.S. beginning this fall.
Nike has been navigating the impact of broad tariffs introduced by President Trump earlier this year. Though the long-term effect remains uncertain due to Nike’s global footprint, the company began moving manufacturing away from China during Trump’s first term. By 2024, just 18% of Nike’s apparel and 16% of footwear were produced in China, compared to 26% and 29% in 2016.
The company’s performance in China remains weak, with regional revenue down 20% last quarter, largely due to a 20% drop in footwear sales and a 19% fall in apparel.
For its fiscal fourth quarter, Nike reported $11.1 billion in revenue, a 12% year-over-year drop but better than Wall Street’s estimate of a 15% decline to $10.72 billion, per Bloomberg data. Adjusted earnings per share came in at $0.14, slightly above the forecast of $0.13, though well below the $1.01 per share reported a year ago. Same-store sales at Nike-owned outlets rose 2%, beating expectations of a 2.6% decline.
Nike continues to battle weakening consumer confidence and stiff competition from brands like On (ONON) and Hoka (DECK), as it works to revive store traffic and market share.
Despite Friday’s gain, Nike shares remain down more than 6% in 2025 but have staged a sharp recovery since April 8 — the day before President Trump suspended his most aggressive tariffs on what he called “Liberation Day.”
Looking ahead, Nike is banking on upcoming innovations and product launches including the Vomero 18, Jordan Retros, A’One, and a new collaboration with Kim Kardashian. The company is also rebuilding wholesale relationships with partners such as Dick’s Sporting Goods (DKS) and Macy’s (M) after previously pivoting toward a direct-to-consumer model.
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