Latest news with #Vomero
The Sun
2 hours ago
- Business
- The Sun
Nike to cut China output for US market to ease tariff blow
BENGALURU: Nike said it would cut its reliance on production in China for the US market to mitigate the impact from US tariffs on imports, and forecast a smaller-than-expected drop in first-quarter revenue, sending its shares up 11% in extended trading. US President Donald Trump's sweeping tariffs on imports from key trading partners could add around US$1 billion (RM4.2 billion) to Nike's costs, company executives said on a post-earnings call after the sportswear giant topped estimates for fourth-quarter results. China, subject to the biggest tariff increases imposed by Trump, accounts for about 16% of the shoes Nike imports into the US, chief financial officer Matthew Friend said. But the company aims to cut the figure to a 'high single-digit percentage range' by the end of May 2026 as it reallocates China production to other countries. 'We will optimize our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the US,' he said on a call with investors. Consumer goods is one of the most affected areas by the tariff dispute between the world's two largest economies, but Nike's executives said they were focused on cutting the financial pain. Nike will 'evaluate' corporate cost reductions to deal with the tariff impact, Friend said. The company has already announced price increases for some products in the US 'The tariff impact is significant. However, I expect others in the sportswear industry will also raise prices, so Nike may not lose much share in the US,' said David Swartz, analyst at Morningstar Research. CEO Elliott Hill's strategy to focus product innovation and marketing around sports is beginning to show some fruit with the running category returning to growth in the fourth quarter after several quarters of weakness. Having lost share in the fast-growing running market, Nike has invested heavily in running shoes such as Pegasus and Vomero, while scaling back production of sneakers such as the Air Force 1. 'Running has performed especially strongly for Nike,' said Citi analyst Monique Pollard, adding that new running shoes and sportswear products are expected to offset the declines in Nike's classic sneaker franchises at wholesale partner stores. Marketing spending was up 15% year-on-year in the quarter. On Thursday, Nike hosted an event in which its sponsored athlete Faith Kipyegon attempted to run a mile in under four minutes. Paced by other star athletes in the glitzy and live-streamed from a Paris stadium, Kipyegon fell short of the goal but set a new unofficial record. – Reuters
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Business Standard
3 hours ago
- Business
- Business Standard
Nike to cut China output by 2026 as Trump tariffs threaten $1 billion hit
Nike said it plans to significantly reduce its reliance on China-based manufacturing for the US market by May 2026, as part of a broader strategy to mitigate the impact of US tariffs imposed under President Donald Trump's trade policies, Reuters reported. The company expects these tariffs could add around $1 billion to its costs, executives said during a post-earnings call. Chief Financial Officer Matthew Friend said, about 16 per cent of Nike's footwear imported into the US currently comes from China — the country most affected by Trump's sweeping tariff hikes. Nike plans to cut that figure to a 'high single-digit percentage range' within two years by reallocating production to other countries. 'We will continue to evaluate corporate cost reductions to absorb the impact of these tariffs,' Friend said, as quoted by Reuters. Nike has already begun raising prices on select products in the US, following a similar move by rival Adidas. US tariff decisions spark global trade recalibrations US President Trump's 'Liberation Day' tariff package, announced on April 2, imposed broad-based duties on imports from major trade partners. Though most of those tariffs were paused for 90 days to allow for negotiations, the looming July 9 expiry has led to speculation on whether further rate hikes — potentially up to 45 per cent — could be enforced. At a White House press event, Trump said, 'We're not going to make deals with everybody. Some we're just going to send them a letter… You're going to pay 25, 35, 45 per cent.' While some deals — including one with China — have emerged, others are still under negotiation. Commerce Secretary Howard Lutnick told Bloomberg that a deal with China includes rare earth mineral supply commitments, while Treasury Secretary Scott Bessent hinted at a possible extension of the 90-day tariff pause, depending on how talks unfold. Earnings beat expectations despite weak quarter Despite reporting a 12 per cent year-on-year fall in fourth-quarter revenue to $11.1 billion — its lowest since Q3 2022 — Nike still beat Wall Street expectations, which had forecast a 14.9 per cent decline. Shares rose more than 10 per cent in extended trading after the company projected a smaller-than-expected revenue drop in the first quarter. Running category regains momentum Nike's strategy of emphasising core sports categories, particularly running, is beginning to pay off. The company has refocused efforts on high-performance shoes such as the Pegasus and Vomero, while scaling back production of legacy styles like the Air Force 1. Nike also increased its marketing spend by 15 per cent year-on-year. A high-profile event in Paris saw athlete Faith Kipyegon attempt a sub-four-minute mile, drawing attention to Nike's renewed focus on athletic performance. China remains a challenge for Nike While the company is minimising its manufacturing dependence on China, executives acknowledged that recovery in the Chinese market remains sluggish due to broader economic challenges and stiff competition, Reuters mentioned. 'We are optimistic, but we know this turnaround will take time,' said Friend, highlighting the company's long-term commitment to adjusting both supply chains and marketing strategies amid evolving global trade dynamics.
New Straits Times
8 hours ago
- Business
- New Straits Times
Nike plans to reduce reliance on China production for US market to soften tariff blow
NEW YORK: Nike said it would cut its reliance on production in China for the US market to mitigate the impact from US tariffs on imports, and forecast a smaller-than-expected drop in first-quarter revenue, sending its shares up 11 per cent in extended trading. US President Donald Trump's sweeping tariffs on imports from key trading partners could add around US$1 billion to Nike's costs, company executives said on a post-earnings call after the sportswear giant topped estimates for fourth-quarter results. China, subject to the biggest tariff increases imposed by Trump, accounts for about 16 per cent of the shoes Nike imports into the United States, Chief Financial Officer Matthew Friend said. But the company aims to cut the figure to a "high single-digit percentage range" by the end of May 2026 as it reallocates China production to other countries. "We will optimize our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the United States," he said on a call with investors. Consumer goods is one of the most affected areas by the tariff dispute between the world's two largest economies, but Nike's executives said they were focused on cutting the financial pain. Nike will "evaluate" corporate cost reductions to deal with the tariff impact, Friend said. The company has already announced price increases for some products in the US. "The tariff impact is significant. However, I expect others in the sportswear industry will also raise prices, so Nike may not lose much share in the US.," said David Swartz, analyst at Morningstar Research. RUNNING FINDS ITS FOOTING CEO Elliott Hill's strategy to focus product innovation and marketing around sports is beginning to show some fruit with the running category returning to growth in the fourth quarter after several quarters of weakness. Having lost share in the fast-growing running market, Nike has invested heavily in running shoes such as Pegasus and Vomero, while scaling back production of sneakers such as the Air Force 1. "Running has performed especially strongly for Nike," said Citi analyst Monique Pollard, adding that new running shoes and sportswear products are expected to offset the declines in Nike's classic sneaker franchises at wholesale partner stores. Marketing spending was up 15 per cent year-on-year in the quarter. On Thursday, Nike hosted an event in which its sponsored athlete Faith Kipyegon attempted to run a mile in under four minutes. Paced by other star athletes in the glitzy and live-streamed from a Paris stadium, Kipyegon fell short of the goal but set a new unofficial record. Nike forecast first-quarter revenue to fall in the mid-single digits, slightly better than analysts' expectations of a 7.3 per cent drop, according to data compiled by LSEG. Its fourth-quarter sales fell 12 per cent to US$11.10 billion, but still beat estimates of a 14.9 per cent drop to US$10.72 billion. China continued to be a pain point, with executives saying a turnaround in the country will take time as Nike contends with tougher economic conditions and competition. The company's inventory was flat year-over-year at US$7.5 billion as of May 31.
Fashion Network
9 hours ago
- Business
- Fashion Network
Nike tops Q4 sales, profit estimates as CEO doubles down on sports focus
Nike reported a smaller-than-expected drop in fourth-quarter revenue and beat profit estimates on Thursday, as CEO Elliott Hill's strategy to focus product innovation and marketing around sports begins to pay off. The company, which has been grappling with competition in the running space, has heavily invested in running shoes and sneaker lines such as Pegasus and Vomero, and tried to cut its stock of older models such as the Air Force 1 and Air Jordan 1, through discounts. Under Hill, who joined in October last year, Nike has rekindled relationships with wholesale partners, expanding the company's presence at more physical retailers, and started selling on for the first time in six years. The company's fourth-quarter revenue fell 12% to $11.10 billion, compared with analysts' expectation of a 14.9% drop to $10.72 billion, according to data compiled by LSEG. Under Hill's "win now" strategy, Nike is also investing more into sport-focused marketing to regain its edge as a sports brand. The company on Thursday hosted an attempt by sponsored athlete Faith Kipyegon to run a mile in under four minutes. Paced by other star athletes in the glitzy, live-streamed event in a Paris stadium, Kipyegon fell short of the goal but set a new unofficial record. Nike reported fourth-quarter earnings per share of 14 cents, compared with analysts' average estimate of 12 cents. China continues to be a pain point in the reported quarter, the company said, as tougher economic conditions and competition hurt demand for Nike's sneakers in the country. Sales in China fell 21% in the fourth quarter, following a 17% fall in the prior three-month period. Its gross margin for the quarter ended May 31 fell 440 basis points following a 330 basis points drop in the third quarter. Nike's shares were down 2% in extended trading. They have fallen 19.6% so far this year.
Fashion Network
9 hours ago
- Business
- Fashion Network
Nike tops Q4 sales, profit estimates as CEO doubles down on sports focus
Nike reported a smaller-than-expected drop in fourth-quarter revenue and beat profit estimates on Thursday, as CEO Elliott Hill's strategy to focus product innovation and marketing around sports begins to pay off. The company, which has been grappling with competition in the running space, has heavily invested in running shoes and sneaker lines such as Pegasus and Vomero, and tried to cut its stock of older models such as the Air Force 1 and Air Jordan 1, through discounts. Under Hill, who joined in October last year, Nike has rekindled relationships with wholesale partners, expanding the company's presence at more physical retailers, and started selling on for the first time in six years. The company's fourth-quarter revenue fell 12% to $11.10 billion, compared with analysts' expectation of a 14.9% drop to $10.72 billion, according to data compiled by LSEG. Under Hill's "win now" strategy, Nike is also investing more into sport-focused marketing to regain its edge as a sports brand. The company on Thursday hosted an attempt by sponsored athlete Faith Kipyegon to run a mile in under four minutes. Paced by other star athletes in the glitzy, live-streamed event in a Paris stadium, Kipyegon fell short of the goal but set a new unofficial record. Nike reported fourth-quarter earnings per share of 14 cents, compared with analysts' average estimate of 12 cents. China continues to be a pain point in the reported quarter, the company said, as tougher economic conditions and competition hurt demand for Nike's sneakers in the country. Sales in China fell 21% in the fourth quarter, following a 17% fall in the prior three-month period. Its gross margin for the quarter ended May 31 fell 440 basis points following a 330 basis points drop in the third quarter. Nike's shares were down 2% in extended trading. They have fallen 19.6% so far this year.
