Nike warns Trump tariffs could cost it nearly £730m
The group said it was taking action to offset the hit, having recently warned it would raise prices on some trainers and clothing in the US to counter rising tariffs.
Nike also said it would reduce supply from China to the US market to bring down costs.
It currently makes around 16% of its footwear in China, which is then imported into the US, but is looking to reduce this to a 'high single-digit range' by the end of the current financial year.
Bosses at the group said supply in China would be 'reallocated to other countries around the world'.
Matt Friend, Nike's chief financial officer, said: 'These tariffs represent a new and meaningful cost headwind.'
Mr Trump's tariffs could have a huge effect on the business, Nike chiefs said (AP)
He said the cost impact would be about one billion US dollars (£727 million) if tariffs remain at current levels.
Mr Friend added: 'We will optimise our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the United States, despite the current elevated tariffs for Chinese products imported into the United States.
'Manufacturing capacity and capability in China remains important to our global source base.'
He also said the group was looking to 'minimise the overall impact to the consumer', although it confirmed it would start pushing through price hikes in the US starting from the autumn.
Corporate costs could also be cut under plans to offset the expected cost hit.
The comments came as Nike reported its worst quarterly earnings in more than three years, although the out-turn was better than feared on Wall Street, helping its US-listed shares lift overnight on Thursday.
Chief executive Elliott Hill, who returned from retirement last year to take the helm, is leading a turnaround at the group.
He said the group's results showing a 12% drop in fourth quarter revenues to 11.1 billion dollars (£8.1 billion) were 'not where we want them to be'.
'As we enter a new fiscal year, we are turning the page and the next step is aligning our teams to lead with sport through what we are calling the sport offense,' he said.
Mr Friend also said the sales decline 'reflected the largest financial impact' of its revamp, adding 'we expect the headwinds to moderate from here'.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
an hour ago
- The Independent
Afghanistan is letting in more tourists. The Taliban is welcoming them
Against a backdrop of ongoing international isolation, Afghanistan is quietly emerging as an unlikely destination for adventurous tourists, with visitors arriving by diverse means, from planes and motorbikes to camper vans and even bicycles. Solo travellers and organised tour groups are gradually venturing into a country that, until recently, was wracked by decades of conflict. The country's Taliban administration, which seized power more than three years ago but remains unrecognised by any nation, is actively encouraging this nascent tourism boom. Qudratullah Jamal, the Deputy Minister of Tourism, expressed the administration's enthusiasm in an early June interview with The Associated Press. "The Afghan people are warm and welcoming and wish to host tourists from other countries and engage with them," he stated. "Tourism brings many benefits to a country. We have considered those benefits and aim for our nation to take full advantage of them." This push comes as the Taliban seeks to leverage tourism, a vital multi-billion-dollar global industry, as a potential economic lifeline for a country still grappling with the aftermath of war. Afghanistan's isolation on the international stage, largely because of the Taliban 's restrictions on women and girls, has left much of its 41 million people mired in poverty. As it struggles to attract foreign investment, the lucrative potential of tourism is far from lost on the government. 'We are currently earning a considerable amount of revenue from this industry, and we are hopeful it will grow even more in the future,' Jamal said, noting money spent by visitors can reach more layers of society than revenue from other industries. 'We are optimistic this sector will evolve into a large economy, bringing significant benefits. It plays an important role in strengthening our national economy.' Tourist visas are quick and easy to obtain and flights from major transit hubs such as Dubai and Istanbul operate several times a week. The government has even set up a training institute for men — and it is only for men — seeking jobs in the hospitality and tourism sector. While visitor numbers are still very much a trickle rather than a flood, they are increasing. Nearly 9,000 foreign tourists visited Afghanistan last year, while nearly 3,000 people visited in the first three months of this year, Jamal said. Four decades of near-continuous conflict kept nearly all vacationers away from this landlocked country of towering mountains, deep gorges and millennia of history. The Taliban's takeover from a U.S.-backed government in August 2021 stunned the world and sent thousands of Afghans fleeing. But with the insurgency over, the bloodshed from frequent bombings and suicide attacks all but ended too. Attacks still occur, however. An Islamic State affiliate in Afghanistan remains active and gunmen killed six people, including three Spanish tourists, in a May 2024 attack in Bamiyan, one of the country's main tourist attractions where centuries-old giant Buddhas carved into the cliffs were blown up by the Taliban in 2001. While Western countries still advise against travel to Afghanistan, a drop in violence from the two decades of U.S.-led military presence is indisputable, as the government is keen to point out. 'Afghanistan has gone through many years of war and hardship. Now, we want tourists to come and see the true traditions and customs of Afghans, to understand Afghan life, creativity and resilience,' Jamal said, noting there was 'comprehensive security across Afghanistan.' Critics question the ethics of foreigners visiting Afghanistan for pleasure when its government discriminates so heavily against half the country's population. Education beyond primary school level is banned for girls and women and few professions are open to them. Women cannot enter parks, gardens or gyms. Beauty salons are forbidden. Authorities dictate how women dress and have demanded they cover their faces in public, a decree still flouted by many, particularly in Kabul. Some visitors say they contemplated the ethics, but ultimately wanted to see the situation for themselves. French-Peruvian Illary Gomez said she and her British partner, James Liddiard, debated for about a year whether to drive through Afghanistan as part of their U.K.-to-Japan camper van journey. 'Some things didn't feel morally right,' she said. But once here, they said they found a warm, hospitable and welcoming people and beautiful landscapes. They didn't feel their presence was any form of support for the Taliban. By traveling, 'you put money in the hands of the people, not the government,' Liddiard said. The treatment of women is particularly sensitive for government officials. Jamal declined to comment on the subject beyond saying male and female visitors were welcome. 'Those who respect our laws and traditions have already come and can continue to come,' he said. While most restrictions are strictly enforced on Afghan women, they are far more relaxed for foreigners. Although they must still wear a headscarf in public, foreign women are more likely to gain entry into some restricted areas such as parks and are rarely asked to cover their faces in public. Opening the country to foreign visitors was also a way of building bridges, Jamal said. 'It is a great way to promote interaction between the people of different countries. It helps build international relations and is also beneficial for trade,' he told the AP. 'When foreigners come here, Afghans also learn a lot from them. In addition to expanding commerce, tourism also helps foster mutual understanding, cultural exchange and strengthens talents as people learn from one another.' A foreign traveler seeing the country with his own eyes 'creates closeness, builds connections and fosters trust among people,' Jamal said. 'They will respect each other's culture and the distance between peoples will diminish. 'So this is not just economic development; it also brings spiritual and political benefits,' he said.
The Independent
2 hours ago
- The Independent
Asian shares are mixed after US stocks hit an all-time high
Asian shares started the week with gains after U.S. stocks closed at an all-time high following their recovery from the shocks of the Trump administration's trade policies. Canada's decision to cancel a plan to tax U.S. technology firms that had led President Donald Trump to halt trade talks helped to steady the markets. U.S. stock futures advanced after Canadian Prime Minister Mark Carney said the talks had resumed. In Tokyo, the Nikkei 225 climbed 0.6% to 40,395.99. Hong Kong's Hang Seng lost 0.3% to 24,207.36, while the Shanghai Composite index advanced 0.5% to 3,438.46. China reported that its factory activity improved slightly in June after Beijing and Washington agreed in May to postpone imposing higher tariffs on each others' exports, though manufacturing remained in contraction. In South Korea, the Kospi gained 0.5% to 3,070.93. Australia's S&P/ASX 200 jumped 0.6% to 8,560.80. Taiwan's Taiex lost 1.4% and the Sensex in India was down 0.4%. In Bangkok, the SET was up 0.3%. On Friday, the S&P 500 rose 0.5% to 6,173.07, above its previous record set in February. The key measure of Wall Street's health fell nearly 20% from Feb. 19 through April 8. The Nasdaq composite gained 0.5% to 20,273.46, its own all-time high. The Dow Jones Industrial Average rose 1% to 43,819.27. The gains on Friday were broad, with nearly every sector within the S&P 500 rising. Nike soared 15.2% for the biggest gain in the market, despite warning of a steep hit from tariffs. An update on inflation Friday showed prices ticked higher in May, though the rate mostly matched economists' projections. Inflation remains a big concern. Trump's on-again-off-again tariff policy has made it difficult for companies to make financial forecasts and strained household budgets. A long list of businesses from carmakers to retailers have warned that higher import taxes will likely hurt their revenues and profits. The U.S. has 10% baseline tariffs on all imported goods, along with higher rates for Chinese goods and other import taxes on steel and autos and the threat of more severe tariffs continues to hang over the economy. The current pause on a round of retaliatory tariffs against a long list of nations is set to expire on July 9. Failure to negotiate deals or further postpone the tariffs could once again rattle investors and consumers. In an interview with Fox News Channel's 'Sunday Morning Futures,' Trump said his administration will notify countries that the trade penalties will take effect unless there are deals with the United States. Letters will start going out 'pretty soon' before the approaching deadline, he said. The Federal Reserve is monitoring the tariff situation with a big focus on inflation. The rate of inflation has been stubbornly sitting just above the central bank's target of 2%. In a report Friday, its preferred gauge, the personal consumption expenditures index, rose to 2.3% in May. That's up from 2.2% the previous month. The Fed cut interest rates three times in late 2024 following a historic series of rate hikes to cool inflation. The PCE was as high as 7.2% in 2022 while the more commonly used consumer price index hit 9.1%. The Fed hasn't cut rates so far in 2025 over worries that tariffs could reignite inflation and hamper the economy. Economists still expect at least two rate cuts before the end of the year. Bond yields held relatively steady. The yield on the 10-year Treasury rose to 4.28% from 4.27% late Friday. The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do, stood at 3.74%. In other dealings early Monday, U.S. benchmark crude oil lost 8 cents to $65.44 per barrel. Brent crude, the international standard, gained 6 cents to $66.86 per barrel. The U.S. dollar fell to 143.93 Japanese yen from 144.46 yen. The euro rose to $1.1730 from $1.1725. __ AP Business Writers Damian J. Troise and Alex Veiga contributed.
Times
2 hours ago
- Times
Business live: Canada scraps digital tax to restart stalled US trade talks
China's manufacturing activity contracted for a third month in June, the official purchasing managers' index (PMI) showed. PMI rose to 49.7 in June from 49.5 in May, remaining below the 50-mark that separates growth from contraction and in line with economists' forecasts. The figures suggest factories are battling to find domestic buyers as overseas sales slow in the face of the uneasy trade truce with the US. Beijing is unlikely to be able to meet its 2025 growth target of 'around 5 per cent' if the country's vast manufacturing sector stagnates or shrinks. Asia shares strengthened as signs of progress in a trade standoff between the United States and Canada helped risk sentiment. Japan's Nikkei rose 0.8 per cent and China's SSE Composites gained 0.25 per cent. The FTSE 100 is forecast to open flat when trading begins shortly. The index rose as in a global rally on Friday, fuelled by growing optimism that the US and China are nearing a trade agreement. Investors are also eyeing the progress of a huge US tax-cutting and spending bill making its way through the Senate. The Congressional Budget Office estimated the bill would add $3.3 trillion to the nation's debt, which could test foreign buyers' appetite for US government bonds. Canada scrapped its digital services tax targeting US technology companies on Sunday, just hours before it was due to take effect and in a bid to advance stalled trade negotiations with the United States. Canadian prime minister Mark Carney and US president Donald Trump will resume trade talks in order to agree on a deal by July 21, Canada's finance ministry said in a statement. Trump abruptly called off trade talks on Friday over the tax, saying that it was a 'blatant attack' On Sunday, he had pledged to set a new tariff rate on Canadian breakdown in trade talks comes after the two leaders met at the G7 in mid-June, and Carney said they had agreed to wrap up a new economic agreement within 30 days.
