Still, shares soared 15% on Friday following a better-than-feared quarterly report. Adjust earnings per share tumbled 86% to 14 cents, beating Wall Street forecasts by a penny. Revenue dropped 12% to $11.1 billion, above views for $10.7 billion.

CEO Elliott Hill said on the call with analysts that earnings were “not up to the Nike standard,” but he’s optimistic in the company’s turnaround strategy.

Meanwhile, CFO Matt Friend estimated that tariff costs will be about $1 billion and told analysts that Nike will “fully mitigate” that amount over the next fiscal year by reducing U.S. imports of China-produced products, implementing price increases starting in the fall, and reducing corporate costs.

The company said gross margins fell in Q4, primarily due to steeper discounts, and Nike leadership expects margins for fiscal year 2026 to decrease even further, “with a greater impact in the first half.”

President Donald Trump and his Commerce Secretary Howard Lutnick announced Thursday the administration reached a trade deal with China, though 30% tariffs will remain.

Currently, about 16% of Nike’s footwear imports come from China, and Friend expects this “to reduce to the high-single digit range by the end of fiscal ’26, with supply from China re-allocated to other countries around the world.”

“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 added.

In a note following the earnings report, Goldman Sachs analysts wrote they were “incrementally encouraged” by Nike’s better-than-expected fourth quarter and Hill’s strategic plans. But brand skeptics remain.

“Nike has ended a tough fiscal year on a rather discordant note,” Neil Saunders, managing director of GlobalData, wrote in a Friday note. “While the sportswear giant beat expectations, it also put in a deteriorated sales performance that suggests that it continues to fall out of favor with consumers.”