Nike’s Fancy Footwork With Tariffs
Struggling sneaker giant Nike ($NIKE) filed its latest quarterly report this week, with margin and profit numbers that on the surface looked reasonably good. But that supposedly impressive performance — specifically, sharp jumps in gross profit, pretax income, and net income — was entirely due to Nike booking $986 million in tariff refunds! So does it really count? Let’s start with the headline numbers from the earnings release . Revenue actually fell 1.1 percent from the year-ago period, to $10.97 billion. Gross profit, however, jumped 20.7 percent thanks to a sharp decline in Nike’s cost of goods sold. Pretax income more than tripled, net income more than quadrupled. See Figure 1, below. Earnings growth like that sounds too good to be true, so we opened our Disclosure and Footnotes Query page to do a detailed reading of the earnings release — and, yep, it was. There in the earnings release, Nike included this statement about its most recent quarter (which ended on May 31, and is Ni...