By Jordan Valinsky, CNN
New York (CNN) — Nike is forecasting it will have to pay $1 billion in additional costs because of President Donald Trump’s tariffs, the activewear giant announced Thursday.
The tariffs “represent a new and meaningful cost headwind,” said Matthew Friend, Nike’s chief financial officer on a call with analysts, adding that the company will “fully mitigate” the cost by reducing its supply chain reliance on China – and by passing the costs onto customers with price increases.
Although China “remains important to our global source base,” he said, the company is reducing the imports of footwear to the United States from about 16% to the “high-single-digit range by the end of fiscal 2026,” with the supply coming from other countries.
The impact of tariffs and decline in consumer spending was especially pronounced on its net income for the fourth quarter, which fell 86% to $211 million — a sharp slump from the $1.5 billion it reported a year earlier.
Despite the drop, CEO Elliott Hill said he was bullish on his turnaround plans and that it’s “time to turn the page.” Nike plans to “aggressively rightsize three very important franchises,” including its Air Force 1, Dunk and the Air Jordan labels, he said. However, its delayed launch of NikeSkims with Kim Kardashian wasn’t mentioned on the call.
Investors cheered the optimism that the worst may be behind Nike. Shares of Nike (NKE) jumped nearly 11% in premarket trading Friday.
Hill is shifting Nike back to sports, a priority that was de-emphasized under its former CEO.
“Nike, Jordan, and Converse teams will now come to work every day with a mission to create the most innovative and coveted product, footwear, apparel, and accessories for thespecific athletes they serve,” Hill said. “These sport-obsessed teams will create greater dimension and distinction for our three brands, will make us more competitive, and will accelerate our growth.”
In a note, Neil Saunders, managing director of GlobalData, said he has “some confidence” that Nike is “over the worst of things as far as profitability is concerned.”
Nike “remains the most significant brand in sportswear by a large margin,” Saunders wrote. “This means new growth does not come easily and that market share has to be constantly defended from other smaller players. It also underlines that Nike is a very relevant brand and, despite its problems, has a firm base from which to build.”
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