Nike to Reduce Reliance on China Exports Amid Tariff Concerns; Stock Rises

Nike announced it will reduce its reliance on manufacturing in China to mitigate the impact of potential new U.S. tariffs. The company reported lower-than-expected revenue for Q1 FY2025 (ending August), due to weaker wholesale demand. However, Nike’s stock rose 9% on June 27 after the announcement. Competitors like Puma and Adidas also saw their shares increase.

Key Points:

• CFO Matthew Friend said U.S.-China trade tensions are prompting Nike to shift production away from China, with a full transition expected by mid-2026.
• Currently, 16% of Nike’s products shipped to the U.S. come from China.
• Nike plans to diversify sourcing to reduce costs and improve flexibility.
• Global wholesale weakness remains a challenge, but Nike aims to boost profitability and expand margins.
• Morningstar analyst David Swartz said Nike still holds strong brand value, especially in the direct-to-consumer segment.
• Q1 gross margin fell 0.5% to 43.2%; inventory levels are being actively managed.
• Nike maintained a dividend of $0.37/share and announced a $0.13/share dividend for Q2.

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