Nike’s Sales Edges Up, but Profit Plummets 31%

Nike, the world's largest sportswear brand, reported a modest increase in sales, but a significant decline in profit, as the company navigates a challenging landscape marked by rising tariffs and shrinking margins. The quarterly results underscore the hurdles facing CEO John Donahoe, who has been tasked with leading a turnaround effort to revitalize the iconic brand.In the three months ended November 30, Nike's revenue inched up 1% to $9.8 billion, missing analysts' expectations. However, net income plummeted 31% to $962 million, or $1.18 per share, compared to $1.39 per share in the same period last year. The shortfall was largely attributed to higher selling and administrative expenses, as well as a significant increase in costs associated with tariffs imposed on the company's Chinese imports.The tariffs, a result of the ongoing trade tensions between the United States and China, have been a persistent thorn in Nike's side. The company has been working to mitigate the impact by adjusting its supply chain and pricing strategies, but the effects are still being felt. Gross margins, in particular, contracted 2.4 percentage points to 44.8%, largely due to the higher costs.Despite the challenges, Nike's top executive remains optimistic about the company's prospects. Donahoe has been spearheading a turnaround plan aimed at reaccelerating growth, improving profitability, and enhancing the brand's digital capabilities. The plan involves investing in e-commerce, streamlining operations, and refreshing product lines to better resonate with increasingly discerning consumers.The company continues to bank on its strengths in the basketball and running segments, while also making a push into the rapidly growing market for sustainable and athleisure wear. As Nike works to regain its footing, investors and analysts will be closely watching the company's progress in addressing its margin pressures and navigating the complexities of the global trade landscape.