Nike Inc (NYSE:NKE, ETR:NKE) shares surged more than 10% in after-hours trading Thursday after the sportswear giant beat Wall Street expectations for its fiscal fourth quarter — even as revenue and profit declined sharply.
The company reported revenue of US$11.1 billion, down 12% from the same period last year but ahead of analyst forecasts compiled by Visible Alpha. Net income fell to US$211 million, or 14 cents per share, from US$1.5 billion, or 99 cents per share, in the prior corresponding period — still topping projections.
Turnaround strategy weighs
The result marked the third quarter under new chief executive officer Elliott Hill, who stepped in last October. The company had warned earlier this year that its turnaround strategy, aimed at resetting its product mix and operations, could weigh on near-term results.
"Moving forward, we expect our business to improve as a result of the progress we're making," Hill told investors on Thursday.
Chief financial officer Matt Friend said the June quarter “reflected the largest financial impact” of the turnaround plan. He projected a mid-single-digit revenue decline for the current quarter, which would mark an improvement on recent double-digit drops.
Friend also flagged the potential impact of US tariffs under the Trump administration, estimating a US$1 billion cost if current levels persist. Still, he added that Nike plans to “fully mitigate the impact of these headwinds over time.”
Despite the after-hours rally, Nike shares remain down 17% year-to-date.