Nike managed to bring out the performance for the fiscal third quarter earnings on Thursday that beat analysts’ expectations under the helm of new CEO Elliott Hill. However, investors remain skeptical over the potential impact of Trump’s tariffs on the company.
The share price of Nike dropped nearly 6% in pre-market session on Friday to $67.68 per share.
According to Nike’s fiscal third quarter earnings that were reported after the market on Thursday closed, the footwear giant’s revenue reached $11.27 billion, surpassing the expectation of $11.03 billion but still lower than the same period’s last year that made $12.43 billion.
However, Nike’s CFO, Matthew Friend, warned of Trump’s tariffs. The company estimated that its fourth quarter gross margins could be down about 400 to 500 basis points, including restructuring charges during the same period last year.
Still, Friend confirmed that Nike is evaluating the several external factors, impact of uncertainty, and other macro factors. Nonetheless, its Q4 revenue is expected to go down.
Nike has been diversifying its manufacturing base from China since Trump’s first time in office. The company cut its reliance on production of apparel and footwear from China to 18% and 16%, respectively in 2024, compared to 26% and 29% in 2016.
According to Yahoo, Needham & Company states that about 60% of Nike’s revenue is made out of North America as it sells in Europe, Asia and Latin America. This portion should not have been impacted by the tariff. Still, there are several products that Nike still produces in China.
Needham & Company noted that despite all the effort that Nike made, it is unlikely to see the same growth rate as it did 10-15 years ago.
As for Hill, the new CEO stated that in the 150 days since he took office, Nike successfully reclaimed its identity as a sports company. He is currently planning to make Nike Digital have fewer promotions and rebuild partnerships with some retailers so when the consumer walks into those stores, they can find what they are looking for from Nike.
