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Nike’s shares surged 10 per cent in pre-market trading on growing investor confidence that the sportswear maker’s turnaround plan is finally starting to pay off.
In a call with analysts after the stock market closed on Thursday, Nike’s chief executive Elliott Hill, who returned from retirement last year to take the top job, outlined initiatives including reorganising to focus on developing product lines for crucial sports.
“When we focus on sport, we win,” Hill said, citing Nike’s line of running products, which has been a main point of investor concern as competitors such as Hoka and On have snapped up market share. Hill said sales in that division were up by high single digits.
Signs that Nike is managing to revive a key business overshadowed disappointing fourth-quarter results, with the company reporting its smallest profit since 2020.
Chief financial officer Matthew Friend told investors that the results “reflected the largest impact” from the company’s turnaround programme, adding that Nike expected “the headwinds to moderate from here”.
The confidence from Nike’s management that the company had drawn a line under its struggles also helped lift shares in London-listed retail chain JD Sports, a key Nike distributor in the UK, on Friday.
Shares in the group had shed 17.3 per cent this year to Thursday’s close, but were up 10.6 per cent in pre-market trading on Friday.
Nike is contending with the after-effects of an unsuccessful pivot to direct-to-consumer sales. Analysts have also criticised it for its dependence on lifestyle products and reliance on fashion trends.
The global sportswear maker has also been adversely hit by US President Donald Trump’s erratic tariff policies, with Nike estimating the measures will increase its costs by about $1bn.
The company is reallocating supply from China to other countries in response to Trump’s tariffs, according to Friend.
While China represents 16 per cent of the footwear Nike imports into the US, the company expects to reduce that figure to the high single-digit range by the end of fiscal 2026.
The sportswear maker posted quarterly net income of $211mn, an 86 per cent drop from the same period last year, and its lowest since the fourth quarter of its 2020 financial year.
Nike said it expected the next quarter’s revenues to be down by mid to single digits.