Nike, the American sports brand giant, announced on Thursday (June 26) that it would reduce its reliance on production in China in response to the new round of U.S. tariff policies and to alleviate cost pressures. Encouraged by this positive news, Nike’s stock price surged 11% in after-hours trading that day.
Matthew Friend, Nike’s Chief Financial Officer, stated during the financial conference call that currently about 16% of footwear products sold to the U.S. are from China. The company plans to reduce this percentage to single digits by the end of May 2026, by diversifying production capacity to other countries and reducing reliance on the Chinese supply chain.
According to company estimates, if U.S. President Trump’s new round of tariff policies are fully implemented, Nike could face up to an additional $1 billion in costs. In addition to transferring production capacity, Nike is also working on reducing overall operating costs and raising prices for certain product lines in the U.S.
Analyst David Swartz from Morningstar Research pointed out that it is expected that other brands will also follow suit in raising prices, therefore Nike’s market share in the U.S. is unlikely to be affected in the short term.
Under the leadership of CEO Elliott Hill’s “Focus on Sports Innovation and Marketing” strategy, Nike has increased investment in the running shoe category, with sales of running shoes rebounding this quarter. New models such as Pegasus and Vomero have performed well, while production of classic shoes like Air Force 1 has been reduced.
Citigroup analyst Monique Pollard stated that the growth of Nike’s new running shoes and sportswear is expected to offset the decline in sales of classic shoes through wholesale channels.
In terms of marketing, expenditures increased by 15% compared to the same period. On June 26, Nike held a special event in Paris inviting signed athletes, including Kenyan track star Faith Kipyegon, to challenge the women’s 1-mile 4-minute record. Although unsuccessful, the event still set an unofficial best performance. The event was livestreamed on social media platforms and drew a lot of attention.
Despite a 12% year-on-year decline in revenue to $11 billion in the fourth quarter of the 2025 fiscal year, Nike’s performance was better than the expected $10.72 billion. Nike projects that revenue for the first quarter of the 2026 fiscal year will decline by low single digits, outperforming market expectations of a 7.3% drop.
However, the slow recovery of the Chinese market remains a major challenge. Management admitted that the recovery “will take time” due to the influence of macroeconomic factors and competition from local brands.
As of May 31, the company’s total inventory amounted to $7.5 billion, remaining stable compared to the same period last year, indicating that the supply chain and inventory management are fundamentally stable.
(Source: Reference to relevant reports from Reuters)