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Nike said Thursday it would cut its reliance on production in China to mitigate the impact from US tariffs on imports, and forecast a smaller drop in first-quarter revenue than expected by analysts, sending its shares up 11% in extended trading.
President Trump’s sweeping tariffs on key trading partners could add around $1 billion to Nike’s costs, company executives said on a post-earnings call after the sportswear giant topped estimates for fourth-quarter results.
Consumer goods is one of the areas most affected by the tariff dispute between the world’s two largest economies, but the executives said they were focused on cutting the financial pain.
China, subject to the biggest tariff increases imposed by Trump, accounts for about 16% of the shoes Nike imports into the United States, chief financial officer Matthew Friend said.
But the company aims to cut the figure to a “high single-digit percentage range” by end-May 2026 by shifting production to other countries.
“We will optimize our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the United States,” said Friend.
Nike will also “evaluate” corporate cost reductions to deal with the tariff impact, Friend said. Nike has also already announced price increases to partly mitigate the impact of tariffs.
“The tariff impact is significant. However, I expect others in the sportswear industry will also raise prices, so Nike may not lose much share in the US,” said David Swartz, analyst at Morningstar Research.
Nike forecast first-quarter revenue to fall in the mid-single digits, slightly better than estimates of a 7.3% drop, as CEO Elliott Hill’s strategy to focus product innovation and marketing around sports begins to pay off.
The running category returned to growth in the fourth quarter, Friend said. Having lost share in the fast-growing market, Nike has invested heavily in running shoes such as Pegasus and Vomero, while scaling back production of sneakers such as the Air Force 1.
Under Hill, who joined in October last year, Nike is investing more into marketing focused on sports, with marketing spending up 15% year-on-year in the quarter. On Thursday, it hosted an attempt by sponsored athlete Faith Kipyegon to run a mile in under four minutes.
Paced by other star athletes in the glitzy, live-streamed event in a Paris stadium, Kipyegon fell short of the goal but set a new unofficial record.
Nike’s fourth-quarter sales fell 12% to $11.10 billion, compared with analysts’ expectation of a 14.9% drop to $10.72 billion, according to data compiled by LSEG.
China continued to be a pain point, with executives saying a turnaround in the country will take time as Nike contends with tougher economic conditions and competition.
The company’s inventory was flat as of May 31, compared with a year ago, at $7.5 billion.
