Sportswear Giant Battles $1bn Trump-Imposed Tariff Hit

  • Nike’s quarterly profits drop by 86% due to a decline in sales and costly restructuring program
  • Tariffs imposed by President Trump expected to add $1bn to Nike’s costs this year
  • Revenue falls 12% to $11.1bn, the lowest since Q3 2022
  • Greater China sees steepest sales drop, while North America and EMEA show signs of recovery
  • Nike plans to reduce reliance on China for US-bound footwear production
  • Price hikes to offset tariff burden in the US starting this autumn
  • Revenue guidance for upcoming quarter exceeds expectations, shares rise more than 10%
  • Encouraging signs in North America and EMEA, China recovery expected to take longer
  • Nike follows Adidas’ move to increase prices due to trade costs

Nike has reported an 86% drop in quarterly profits due to a sharp decline in sales and costly restructuring, with net profit falling to $211m from $1.5bn a year earlier. Revenues dropped by 12% to $11.1bn, the lowest since Q3 2022. Greater China experienced the steepest sales decline, while North America and EMEA showed signs of recovery. Nike’s Chief Financial Officer Matthew Friend confirmed that the firm would implement ‘surgical’ price increases in the US starting this autumn to offset new tariffs introduced by President Trump. The Oregon-based brand estimates the current tariff regime could add around $1bn to its costs this year. To mitigate the impact, Nike plans to reduce its reliance on China for US-bound footwear production from 16% to high single digits by May 2026. Nike’s price hikes follow similar moves from Adidas, which warned last month that rising trade costs would force it to increase US prices as well. Despite the weak quarter, shares rose more than 10% in after-hours trading as Nike’s revenue guidance for the upcoming quarter came in better than expected.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about Nike’s financial performance, the impact of tariffs on its business, and the company’s plans to mitigate those impacts. It also mentions similar actions taken by Adidas. However, it could be more concise in some parts and avoid speculation about retailers pulling back flexibility for staff.
Noise Level: 3
Noise Justification: The article provides relevant information about Nike’s financial performance and its response to tariffs, including specific actions taken by the company to mitigate the impact of these costs. It also mentions similar actions from a competitor, Adidas. The focus is on the business implications of trade policies and their effects on the industry, which is relevant for readers interested in this topic.
Financial Relevance: Yes
Financial Markets Impacted: Yes
Financial Rating Justification: The article discusses Nike’s drop in quarterly profits, the impact of US tariffs on its business, and the company’s plans to implement price increases to offset these costs. It also mentions the potential impact on financial markets due to global trade policy uncertainty.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the text and it’s not the main topic.

Reported publicly: www.retailgazette.co.uk www.retailsector.co.uk