Nike Braces for Additional USD1B Cost Due to U.S. Tariffs
(MENAFN) Nike, the American athletic giant, revealed it is bracing for an additional $1 billion in costs as a result of tariffs introduced during the Trump administration. The company is also accelerating efforts to reduce its reliance on Chinese manufacturing.
“These tariffs represent a new and meaningful cost headwind,” said Matthew Friend, Nike’s Chief Financial Officer, during a Thursday earnings briefing.
“With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion. We intend to fully mitigate the impact of these headwinds over time,” Friend explained.
In the past year, nearly 60% of Nike-branded apparel was produced in Vietnam, China, and Cambodia, while 95% of its footwear was manufactured in Vietnam, Indonesia, and China.
Friend acknowledged that China “remains important to our global source base,” but emphasized Nike's plan to cut footwear imports from China to a “high-single-digit range by the end of fiscal 2026,” focusing more on alternative sourcing countries.
Nike also unveiled a "surgical price increase" in the US starting this fall as part of its strategy to offset these increased costs. Additionally, the company will look to reduce expenses through corporate cost-cutting measures.
Nike's financial performance was notably impacted by the tariffs and soft consumer spending. For the fourth quarter, its net income plunged 86% to $211 million, marking its worst quarterly earnings in over three years. Revenues dropped 12%, settling at $11.1 billion.
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