New York (AFP) – Nike reported a surprise increase in quarterly sales Tuesday, pointing to progress on a turnaround as it forecast a bigger cost hit from US tariffs. Shares of the sports giant jumped in after-hours trading as Nike executives said their strategic pivot — branded as “Win Now” — was beginning to see greater success.
“I’m encouraged by the momentum we generated in the quarter, but progress will not be linear as dimensions of our business recover on different timelines,” said Chief Financial Officer Matthew Friend. Profits were $727 million in Nike’s first quarter of fiscal 2026, down 31 percent from the year-ago level. Revenues inched one percent higher to $11.7 billion. Sales rose in every region except Greater China. The results topped analyst estimates in both earnings and revenues.
But Friend lifted the company’s estimate of the total cost from US tariffs under President Donald Trump’s administration to an annual hit of $1.5 billion from the prior $1 billion. Friend also lowered the forecast for profit margins in the coming quarter. The sports giant in recent years has struggled with an oversupply of merchandise that fell flat with consumers, necessitating heavy promotions and raising doubts about innovation. Nike’s heavy emphasis on direct selling to consumers under prior management meant scaling back relationships with wholesalers that company leaders are now working to rebuild.
In September 2024, Nike announced the return of company veteran Elliot Hill as CEO. Hill said Tuesday the company was working to deepen promotional efforts by sport and through the company’s brands of Jordan and Converse, in addition to namesake Nike. Neil Saunders of GlobalData Retail described the results as a partial victory.
“All in all, we think Nike is making progress. But there is a lot more work to be done in resetting the brand at a macro level and to gain ground among different pockets and tribes of consumers that now form the sportswear market,” Saunders said in a note. Shares of Nike rose 3.6 percent in after-hours trading.
© 2024 AFP
