Poor performance, but seeing hope for "turning losses into profits," Nike's stock price soared after hours

Sportswear giant Nike announced its worst quarterly earnings in over three years on Thursday; however, investor confidence in the success of its transformation plan increased, driving the company's stock price up more than 10% in after-hours trading.

In the fourth fiscal quarter, Nike reported revenue of $11.1 billion, exceeding analysts' expectations, but still marking the lowest level since the third quarter of 2022. Net profit was $211 million, a staggering 86% drop from the same period last year, setting a new low since the fourth quarter of fiscal 2020.

Nike CEO Elliott Hill outlined the company's reform initiatives during a conference call with analysts, which include restructuring to focus on product line development in key sports areas. As Hill and Chief Financial Officer Matthew Friend spoke, Nike's stock price climbed steadily.

Hill stated, "When we focus on sports, we can win." He specifically mentioned Nike's running product line, which had previously been a major concern for investors as competitors like Hoka and On Running captured market share. Hill revealed that sales of running products achieved high single-digit growth.

Friend noted that the disappointing performance "reflects the greatest impact of the company's transformation plan," adding that Nike expects "adverse factors to ease thereafter."

Nike has been working to address the negative effects of previously overemphasizing its direct sales model. Analysts have also criticized Nike for being overly reliant on lifestyle products and fashion trends.

Additionally, the global sportswear manufacturer has been adversely affected by U.S. President Donald Trump's fluctuating tariff policies. Nike estimates that under the new tariff rates, its own costs will increase by approximately $1 billion.

Friend stated that to cope with Trump's tariff policies, the company is shifting its supply chain to other countries