Nike stock prices surged 13.3% during Friday trading after the company revealed its plan to decrease Chinese manufacturing exposure and provided initial indications of its turnaround strategy success.
The athletic wear giant announced it will decrease Chinese imports to the U.S. market to single-digit percentages from its current 16% level to reduce expected $1 billion tariff expenses. Nike implements this strategy as part of its broader initiative to adapt to rising political tensions and changing consumer preferences.
CEO Elliott Hill’s efforts to boost the brand through innovative products and sports performance focus received positive investor reactions despite China sales dropping 20% in the last quarter and profit results falling short. The Vomero 18 serves as a new running shoe that has brought back growth in this specific category.
Analysts recognized Nike’s decision to return to wholesale distribution including Amazon after a six-year absence as a strategic move to regain market share. The company uses promotional offers to eliminate excess inventory of its classic lifestyle products including Air Force 1s and Dunks.
Needham analyst Tom Nikic stated that Nike has likely reached its lowest point because of CEO Elliott Hill’s effective leadership which restored investor confidence. Nike has postponed its Skims launch which analysts interpret as a sign that the company is returning to its athletic core business.
