Quick overview

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Nike (NKE) surged during Thursday’s extended trading after the company informed investors that its profit and sales declines would slow in the current quarter, despite the company’s costs from tariffs being predicted to reach $1 billion.

Nike’s fiscal fourth quarter ended on May 31 with a 12 percent drop in revenue; the company expects a mid-single-digit drop in sales this quarter. During the company’s late Thursday conference call with investors, Nike CFO Matthew Friend said that the recently implemented US tariffs “represent a new and meaningful cost headwind.”. According to Nike, tariffs will result in a 100-basis-point drop in gross margins.

“We intend to mitigate the impact of these headwinds over time fully,” Friend said, referring to the “gross incremental cost increase to Nike of approximately $1 billion.”.

Nike reported revenue of $11.1 billion for its fiscal fourth quarter, which ended on May 31. This was a 12 percent decline, less than the nearly 15 percent decline Wall Street had predicted, which was $10.72 billion. In contrast to the projected $0.13 per share, adjusted earnings per share came to $0.14. Compared to the $1.01 per share in earnings it reported in the same quarter last year, that was a significant decrease.

Nike-owned stores saw a slight increase in same-store sales, up 2% as opposed to the 2–6% drop analysts had predicted. “Our financial results meet our expectations, but they fall short of our desired level. We anticipate that the progress we’re making will lead to an improvement in our business.”

CEO Elliott Hill stated in the press release. Given its extensive global operations and exposure to both China and Vietnam, Nike has struggled with the broad tariffs imposed by President Trump, the effects of which are still unknown.