Nike Predicts Sales Slump Has Hit Bottom As Tariffs Loom

Nike Inc. said its yearlong sales decline is starting to ease, suggesting that Chief Executive Officer Elliott Hill’s strategic moves are paying off.

Nike shares advanced as much as 15% at the on Friday — the biggest intraday gain since 2022 — after an upbeat earnings call rekindled enthusiasm about the company’s turnaround efforts. Before today, the stock had lost a third of its value over the past 12 months.

The sportswear company expects sales to fall by a mid-single digit in the current quarter, a smaller drop than Wall Street anticipated and an improvement from the previous three-month period. Nike didn’t issue guidance for its full fiscal year due to tariffs and uncertainty.

Bloomberg's Poonam Goyal reports.

Hill pitched “a clear path to recovery ahead” to investors and analysts on Nike’s conference call. “From here, we expect our business results to improve,” he said. “It’s time to turn the page.”

Nike has reached an inflection point after a rough stretch, according to Jefferies analyst Randal Konik. Management continues to act with urgency to clear out inventory and rebuild relationships with retailers, he wrote in a research note.

The optimism spilled over to shares of rivals Adidas AG and Puma SE, which rose as much as 4.3% and 5.9%, respectively, in German trading.

Hill, who came out of retirement last October, is fighting to reverse missteps of recent years, including a botched pullback from wholesale partners and an overemphasis on lifestyle footwear. His efforts have been hindered by tariffs, weak discretionary spending and intense competition. Hill has pinned the turnaround on boosting relationships with retailers, investing in product development and refocusing on sports.

Sales in the most recent quarter fell 11% on a currency-neutral basis, extending a string of declines but surpassing analysts’ expectations as Nike cleared inventory to make way for fresher designs.

Greater China was the only region that didn’t beat estimates in the quarter. Executives said traffic remains challenged there and the recovery will take longer.

“The progress made from focusing on innovation is showing very early signs of success,” Bloomberg Intelligence analyst Poonam Goyal said. “More work is still needed but Nike appears headed in the right direction.”

Back to Amazon

A vital part of Hill’s plan is mending relationships with Nike’s retail partners that were scorned in recent years as the company looked to channel sales through its own stores, websites and apps. As part of that effort, Nike has returned to Amazon.com Inc. Hill said the brand will have a featured store on Amazon, with products from its running, training, basketball, and sportswear lines.

Nike is aggressively trying to make room for new products on store shelves. Inventory fell 0.4% in the quarter. The company is offering discounts on older items to make way for products such as running shoes and oversized track jackets and pants.

Chief Financial Officer Matt Friend said the inventory cleanup is proceeding as planned. Nike is on track to end the first half of the current fiscal year in a “healthy and clean position,” he said.

Nike women’s business has experienced some setbacks in recent months. Executives delayed the release of NikeSkims, a highly anticipated new brand created with entrepreneur and reality TV star Kim Kardashian that will be key to its women’s business, due to production issues.

Raising Prices

Tariffs also continue to loom over Nike’s operations following US President Donald Trump’s increase of levies on many trade partners. Friend said the company is confident it can “navigate through this current dynamic and uncertain environment.”

Nike plans “surgical” price increases in order to mitigate tariffs, which the company expects to increase costs by about $1 billion. China represents about 16% of Nike footwear imported into the US, and Nike plans to reduce that percentage to a high-single digit by the end of its fiscal year. That production will be reallocated to other countries.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals