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Nike shares rallied in after-hours trading on growing investor confidence that its turnaround plan finally seemed to be paying off, despite reporting its worst quarterly earnings in more than three years.
In a call with analysts, Nike’s chief executive Elliott Hill, who returned from retirement last year to take the top job, outlined initiatives including reorganising to focus on developing product lines for crucial sports. Shares rallied as he and chief financial officer Matthew Friend spoke, rising more than 10 per cent in after-hours trading.
“When we focus on sport, we win,” Hill said, citing Nike’s running product line, which has been a main point of investor concern as competitors such as Hoka and On have snapped up market share. Hill said running sales were up by high single digits.
Friend said the disappointing results “reflected the largest impact” from the company’s turnaround programme, adding that Nike expected “the headwinds to moderate from here”.
The Oregon-headquartered company on Thursday announced fourth-quarter revenue of $11.1bn, which surpassed analyst expectations but were the lowest figure since the third quarter of 2022.
“The results we’re reporting today in Q4, and in FY 25 are not up to the Nike standard,” Hill said.
Nike is contending with the after-effects of an unsuccessful emphasis on direct-to-consumer sales. Analysts have also criticised it for its dependence on lifestyle products and reliance on fashion trends.
The global sportswear maker has also been adversely impacted by US President Donald Trump’s volatile tariff policies. Nike estimated its own costs will increase by about $1bn under new tariff rates.
The company is reallocating supply from China to other countries in response to Trump’s tariffs, according to Friend. While China represents 16 per cent of the footwear Nike imports into the US, the company expects to reduce that figure to the high single-digit range by the end of fiscal 2026.
The sportswear maker posted quarterly net income of $211mn, an 86 per cent drop from the same period last year, and its lowest since the fourth quarter of its 2020 financial year.
Nike said it expected the next quarter’s revenues to be down mid to single digits.
Overall, despite facing challenges, Nike remains optimistic about its future prospects as it continues to focus on innovation and strategic restructuring to drive growth in the competitive sportswear market.
Stay tuned for more updates on Nike’s journey towards success.
