Nike (NKE) stock soared on Friday after the sneaker giant said its profit and sales declines would narrow in the current quarter, while costs from tariffs are expected to approach $1 billion as the company makes additional moves to diversify its supply chain away from China.
Nike said Thursday it expects sales to be down by mid-single digits in the current quarter following a 12% drop in revenue during its fiscal fourth quarter ended May 31.
Gross margins fell by 440 basis points, or 4.4%, in its fourth quarter and are forecast to fall by 350-425 basis points in the current quarter.
Shares rose 15.2% on Friday, bringing Nike’s year-to-date losses to less than 5%; in early April, Nike stock was down 30% in 2025 alone.
Read more about Nike’s stock moves and today’s market action.
On its conference call with investors late Thursday, Nike CFO Matthew Friend said newly implemented US tariffs “represent a new and meaningful cost headwind.” Nike expects a 100 basis point negative impact on its gross margins as a result of tariffs.
Friend added the company sees a “gross incremental cost increase to Nike of approximately $1 billion,” adding, “We intend to fully mitigate the impact of these headwinds over time.”
On Thursday, Nike said it plans to cut its reliance on China for manufacturing the goods it sells in the US as part of this strategy.
Chinese suppliers currently account for about 16% of the shoes it imports into the US, and the company said on its earnings call that it expects to bring that down to “high single-digit range” by the end of this fiscal year. The company also announced plans for a “surgical price increase” in the US, which is set to begin this fall.
Read more: What Trump’s tariffs mean for the economy and your wallet
Nike has been challenged by the sweeping tariffs announced by President Trump earlier this year, with those impacts still uncertain given its global operational footprint and exposure both to China and Vietnam.
The company has been diversifying its manufacturing base since Trump’s first term in office. In 2024, it produced 18% of its apparel and 16% of footwear in China, compared to 26% and 29%, respectively, in 2016.
Nike’s struggles in China have also continued, with revenue falling 20% in the region last quarter, driven by a footwear and apparel sales decline of 20% and 19%, respectively.
For its fiscal fourth quarter, ended May 31, Nike reported revenue of $11.1 billion, a 12% decline that was lower than Wall Street forecasts for a nearly 15% decline to $10.72 billion, according to Bloomberg data. Adjusted earnings per share tallied $0.14, compared to the forecast $0.13 per share. That was far lower than the $1.01 per share in earnings it reported in the same quarter last year.
