Nike’s stock rises as a turnaround is underway despite tariff concerns
Nike (NKE.N), opens new tab shares jumped 10% in premarket trade on Friday as optimism in the sportswear giant’s continuous turnaround attempt was reinforced by an optimistic forecast and plans to cut back on China production of goods headed for the United States.
As political tensions between Washington and Beijing increased, major U.S. brands spent years moving away from Chinese manufacturers; nevertheless, the most recent import tariffs imposed by President Donald Trump are forcing businesses to accelerate their withdrawal.
By the end of May 2026, Nike intends to reduce the proportion of Chinese-made goods headed for the United States to a “high single-digit percentage range”. Approximately sixteen percent of the shoes that the United States imports are currently made in China.
After Nike reported its largest sales drop in about five years but provided a better-than-expected revenue outlook for the first quarter, executives warned Thursday that Trump’s broad tariffs might also increase Nike’s expenses by around $1 billion.
“China was down 20% and there was essentially no profit, which is not a healthy outcome… Simon Jaeger, portfolio manager at Flossbach von Storch in Cologne, Germany, which owns Nike stock, stated, “As usual, however, the markets are pricing in what is coming rather than what has been in the results.”
Much attention was also paid to how Nike’s running division was recovering from a period of weak demand.
Elliott Hill, the company’s new CEO, helped the recovery in part by launching new products to regain market position in the running area. Nike has reduced its inventory of older models, such as the Air Jordan 1 and Air Force 1, through sales and made investments in running shoe and sneaker brands like Vomero and Pegasus.
As part of the broader redesign, Hill also hopes to increase its presence in more physical outlets and revive ties with wholesale partners.
According to a letter from analysts at Evercore ISI, “We believe longer-term investors can now start to rotate back into the stock as one of the biggest potential turnarounds in consumer.”
Additionally, its outcomes contributed to a 3%–7% increase in the shares of German competitors Adidas (ADSGn.DE), Puma (PUMG.DE), and London-listed sportswear store JD Sports (JD.L).
“Nike executives also said they were nearly done with clearing out old inventory, which is a relief for Adidas, Puma, and JD Sports, who were having to compete with aggressive discounting from the bigger sportswear brand,” Jaeger stated.
The 12-month forward price-to-earnings ratio for Nike is 1.90, down 17.4% so far this year. In contrast, Adidas and Puma have ratios of 1.58 and 0.64, respectively.
