Nike shares surge as CEO sees improving results amid turnaround drive

Investing.com - Nike reported fiscal fourth-quarter results that beat analyst estimates, while the company said the financial hit from its ongoing turnaround effort has likely bottomed out.

Shares of Nike (NYSE:NKE) rose over 9% in premarket U.S. trading on Friday. Comments from CEO Elliott Hill during the earnings call, stating that the business is expected to improve from here, helped spur buying.

"It’s time to turn the page," Hill said.

Meanwhile, Nike executives laid out plans to move more of its production operations out of China and to the United States, as part of a bid to avoid higher possible costs from sweeping U.S. tariffs.

Speaking to analysts, executives flagged that Trump’s levies threaten to add roughly $1 billion to the Nike’s expenses. At the moment, around 16% of its shoes imported to the U.S. are derived from China, one of the major targets of President Donald Trump’s aggressive trade taxes, CFO Matthew Friend noted.

Friend outlined plans to slash that number to a "high single-digit percentage range" by the end of May 2026.

In Nike’s fourth quarter, sales dipped 12% to $11.10 billion, but still came in above estimates due partially to the firm’s key running business finding its footing after heavy competition weighed on the unit for a string of quarters.

In North America, sales fell 11% to $4.7 billion, although the decrease was also not as deep as analyst had feared.

Gross margin declined by 440 basis points to 40.3% "due to higher discounts and changes in channel mix," Nike said.

Earnings per share came in at $0.14. Analysts polled by Investing.com had anticipated per-share income of $0.12.

Looking ahead, Nike said it expects that the drag on growth from its turnaround plan will likely moderate.

"The fourth quarter reflected the largest financial impact" from Nike’s drive to overhaul its operations, but these headwinds are tipped to "moderate from here," Friend said. 

Nike sees first-quarter revenue sliding in the mid-single digits, but this was rosier than analysts’ estimates for a 7.3% decline.

"[I]t does seem like a recovery is finally on its way after years of pain," analysts at HSBC wrote in a note upgrading their rating of the stock to "buy" from "hold."

"[W]e think there is more than tangible evidence that Nike has a path to see its sales rebound in the not-too-distant future, and its margins to be repaired, and this despite an unfavourable tariff headwind[.]"

(Frank DeMatteo and Yasin Ebrahim contributed reporting)