Nike's Profit Jumps on a Tariff Refund as China Sales Fall 12%

Nike beat Wall Street on Tuesday, and the reason sits almost entirely in one line of the accounts: a tariff refund. The company reported adjusted earnings of 20 cents a share on revenue of $10.97 billion for its fiscal fourth quarter, ahead of the 13 cents and $10.86 billion analysts had penciled in, according to LSEG estimates.

Look at the reported figure and the jump is spectacular — diluted earnings of 72 cents a share, up from 14 cents a year earlier. Most of that is not shoes sold. Nike said 52 cents of the per-share number came from the expected recovery of duties paid under the Trump administration's global tariffs, after the Supreme Court struck many of them down. Gross margin rose 8.9 percentage points on the quarter, driven largely by an anticipated refund of nearly $986 million.

Take the refund out and the underlying business looks about as it did before. Revenue slipped 1% from the $11.09 billion Nike booked a year ago, and fell 4% on a currency-neutral basis. This is a profit built on a legal windfall, not on people buying more sneakers.

The soft spot is the same one that has dogged Nike for two years. Greater China revenue came in at $1.297 billion, down 12% year on year, the weak link in an otherwise steadier picture. Wholesale revenue rose 4% to $6.6 billion, powered by North America and dragged the other way by China. Investors read the split quickly: the stock fell as much as 8% in extended trading before clawing back most of the loss.

For anyone watching the wider trade story, Nike is a useful gauge. The refund lands because courts unwound duties the company had already paid, which means the cash was sitting on its balance sheet as a cost until a ruling turned it back into income. That is a reminder that tariff policy shows up in corporate results months after the headlines, and in both directions. The details are laid out by CNBC and in the trade coverage from WWD, with the market reaction tracked by Yahoo Finance.

China is the number that decides how the next few quarters read. Nike's home market and Europe can carry a flat top line for a while; they cannot paper over a 12% hole in the third-largest region forever. The refund buys the company a cleaner set of headlines this summer. Whether the swoosh is selling again in Shanghai is the question the accounting cannot answer, and it echoes the uneven signals coming out of the region, from a tentative rebound in factory activity to the chip-driven surge in Asian markets.