New York (AFP) – Nike reported sharply lower quarterly profits Thursday, but signaled it was past the worst stage of a corporate retooling as it implements “surgical” US price increases to defray tariff costs. The Oregon-based sportswear company, beset with oversupply of merchandise that fell flat with consumers, reported profits of $211 million in its fiscal fourth quarter, down 86 percent from the year-ago period. Revenues fell 12 percent to $11.1 billion, with the steepest declines in Nike’s Greater China region.
The company had previously telegraphed that Thursday’s results would be poor as it implements the “Win Now” initiative to revamp the organization, promote innovation and improve relations with wholesalers. “The fourth quarter reflected the largest financial impact from our Win Now actions, and we expect the headwinds to moderate from here,” said Chief Financial Officer Matthew Friend. Friend estimated a gross impact of $1 billion in costs from the US tariffs in place right now. The company aims to lower its share of footwear imported from China to the United States to nine percent from the current 16 percent by the end of its fiscal 2026, Friend said.
Nike has also begun “a surgical price increase” in the United States, with “phased implementation” beginning in the fall, said Friend, who added that the company is working with retail and suppliers to minimize the impact on consumers. The comments elaborated on Nike’s May 21 announcement of the price increase due to tariffs. The biggest hit to earnings from tariffs will be in the upcoming quarter, the first of Nike’s fiscal 2026, Friend said. “We’re confident in our ability to fully mitigate these over time,” he said.
Chief Executive Elliott Hill said recent collaborations with wholesalers Dick’s Sporting Goods and JD Sports had resulted in improved sales. “Momentum and confidence are building in North America and EMEA (Europe Middle East Africa),” said Hill, who described progress in some other countries as slower. “China will take longer,” he said. Shares of Nike rose 4.7 percent in after-hours trading.
© 2024 AFP
