Nike Takes Billion Dollar Tariff Hit But Predicts Hard Yards Behind It

Core Viewpoint - Nike estimates a $1 billion cost increase due to tariffs but believes the worst is behind the company as sales and profit declines moderate moving forward [2][4]. Financial Performance - Nike reported quarterly sales of $11.1 billion, exceeding analyst expectations of $10.72 billion, but down 12% from $12.61 billion a year earlier [6]. - Net income for the quarter was $211 million, a significant drop from $1.5 billion a year prior, indicating an 86% decline in profits [6][9]. - Revenue fell across all regions, with North America sales down 11% to $4.7 billion and revenues in China slightly below expectations at $1.48 billion [10]. Strategic Initiatives - The company is reorganizing its supply chain to mitigate tariff costs and aims to reduce its manufacturing reliance on China from 16% to the high single digits by next summer [4][5]. - Nike is refocusing on sports segmentation and has resumed selling on Amazon, which will feature a brand store for various sports categories [11]. - A new sneaker collection for A'ja Wilson sold out quickly, highlighting the importance of footwear in Nike's business, while apparel represented about 28% of brand revenue in the last fiscal year [12]. Market Challenges - Nike faces increased competition in the athleisure market, particularly in womenswear, which has been a long-standing issue for the company [13]. - The company acknowledges that tariffs have added pressure to its global supply chain strategy, but leadership remains optimistic about overcoming these challenges [14].