Nike stock soars 15% following the company’s latest earnings report and renewed strategies to handle rising costs and market pressures. Despite ongoing sales and profit challenges, the company’s stock surged after it shared a clear plan to reduce its exposure to China and offset higher tariffs.
Nike announced on Thursday that it expects sales to decline by mid-single digits this quarter. This comes after a 12% drop in revenue during the fiscal fourth quarter, which ended on May 31. Gross margins also fell 4.4% last quarter and may decline by up to 4.25% in the current quarter.
However, investor reaction remained positive. Nike stock soars 15%, recovering a portion of its losses from earlier this year. By Friday, Nike had reduced its year-to-date decline to less than 5%. Just two months ago, shares were down 30%.
The company expects new U.S. tariffs to cost nearly $1 billion. CFO Matthew Friend described these tariffs as a major cost pressure. He confirmed a 100-basis-point negative impact on gross margins. Yet, he emphasized Nike’s efforts to fully offset these headwinds in the long run.
To reduce future risks, Nike is lowering its dependence on Chinese manufacturing. Currently, China supplies 16% of Nike’s footwear for the U.S. market. The company aims to cut this figure to single digits by the end of the fiscal year.
In addition, Nike plans a targeted price increase in the U.S. starting this fall. It will also invest in key products such as the Vomero 18 and Jordan Retros. Collaborations with celebrities and improved retail partnerships may further support sales.
Though challenges remain, Nike stock soars 15% as the company outlines a path forward. With reduced reliance on China and focused innovation, Nike aims to rebuild investor confidence and improve results in the coming quarters.
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