BEAVERTON, OREGON – Nike shares soared over 10% in after-hours trading as investor confidence grew in the company’s turnaround strategy, despite reporting its worst quarterly earnings in more than three years.
Immediate Impact
In a call with analysts, Nike’s CEO Elliott Hill, who returned from retirement last year, outlined a series of initiatives aimed at revitalizing the brand’s focus on key sports product lines. As Hill and CFO Matthew Friend detailed their plans, shares surged, reflecting renewed market optimism.
“When we focus on sport, we win,” Hill asserted, highlighting the success of Nike’s running product line, a focal point amid rising competition from brands like Hoka and On.
Key Details Emerge
Nike announced fourth-quarter revenue of $11.1 billion, surpassing analyst expectations but marking the lowest figure since the third quarter of 2022. The company’s net income plummeted to $211 million, an 86% drop from the previous year and the lowest since Q4 of 2020.
Friend explained that the disappointing results were largely due to the company’s ongoing turnaround efforts, but he expressed optimism that “the headwinds will moderate from here.”
By the Numbers
- Q4 Revenue: $11.1 billion
- Net Income: $211 million (86% decrease)
- Running Sales: Up by high single digits
- Expected Cost Increase due to Tariffs: $1 billion
Industry Response
The announcement comes as Nike grapples with the after-effects of its previous direct-to-consumer sales emphasis. Analysts have also criticized the company’s reliance on lifestyle products and fashion trends, which have left it vulnerable in the competitive sportswear market.
Furthermore, Nike has been adversely affected by the volatile tariff policies under former President Donald Trump, leading to increased costs and strategic shifts in supply chain logistics.
Regional Implications
In response to the tariffs, Nike is reallocating production from China to other countries. Currently, China accounts for 16% of Nike’s US footwear imports, but the company aims to reduce this to the high single-digit range by the end of fiscal 2026.
Expert Analysis
Industry experts suggest that Nike’s renewed focus on core sports categories could stabilize its market position. However, they warn that the company must continue to innovate and adapt to changing consumer preferences to maintain its competitive edge.
According to sources familiar with the company’s strategy, the emphasis on running and other key sports aligns with broader industry trends towards performance and functionality.
What Comes Next
Nike anticipates a challenging next quarter, with revenues expected to decline by mid to single digits. However, the company remains committed to its long-term growth strategy, promising further innovations and market adaptations.
The timing is particularly significant as Nike seeks to regain its footing in a rapidly evolving market landscape, where agility and strategic foresight will be crucial to sustained success.
