06:32 AM EDT, 06/27/2025 (MT Newswires) -- Nike ( NKE ) stock climbed early Friday after the sportswear giant laid out a plan to tackle tariff-related costs such as price increases in the US and reducing Chinese footwear imports, while the company recorded better-than-expected fiscal fourth-quarter results.

The athletic footwear and apparel maker estimates a gross incremental increase of roughly $1 billion due to new tariff rates that are currently in place, Chief Financial Officer Matthew Friend said during a late Thursday earnings call, according to a FactSet transcript. "We intend to fully mitigate the impact of these headwinds over time," Friend said.

The company intends to optimize its sourcing mix and allocate production differently across countries to counter new cost headwinds into the US, Friend told analysts. It aims to lower footwear imports from China into the US to a "high-single-digit range" by the end of fiscal 2026 from roughly 16% currently, "with supply from China reallocated to other countries around the world," the CFO said.

Nike ( NKE ) plans to work with its suppliers and retailers to "minimize the overall impact to the consumer," with such arrangements to "come into effect at different times throughout fiscal 2026," according to Friend. The company has executed a "surgical price increase" in the US, with phased implementation to begin in the fall, Friend said on the call.

Shares of Nike ( NKE ) advanced 9.2% in the most recent premarket activity. President Donald Trump reportedly said Thursday that the US has formally signed a trade deal with China, a couple of weeks after the two countries agreed on a framework for implementing a pact that they reached in Switzerland last month. The White House said Trump could extend the suspension of reciprocal tariffs first announced in April, according to reports.

For the fiscal first quarter, Nike ( NKE ) projects revenue to decline by "mid-single digits" and gross margin to be down by about 350 basis points to 425 basis points, Friend said. "This includes approximately 100 basis points negative impact due to the new tariffs based on the rates that are in place today."

Earnings fell to $0.14 a share for the three month-period ended May from $0.99 the year before, but topped the Street's view of $0.13. Revenue dropped 12% to nearly $11.1 billion, but exceeded the average analyst estimate of $10.73 billion.

Revenue for the Nike brand slid 11% to $10.75 billion, weighed down by declines in footwear, apparel and equipment. North American sales moved down 11%, while Europe, the Middle East and Africa decreased 9%. Revenue in China tumbled 21% while Asia Pacific and Latin America declined 8%. Gross margin decreased by 440 basis points to 40.3% mainly due to higher discounts and changes in channel mix, according to the company.

"While our financial results are in-line with our expectations, they are not where we want them to be," Chief Executive Elliott Hill said in the earnings release. "Moving forward, we expect our business to improve as a result of the progress we're making through our Win Now actions."

The company's turnaround strategy is "yielding more rapid improvements" than investors expected, Truist Securities said in a note. Nike's ( NKE ) journey to return to sales growth and margin recovery is appearing "meaningfully stronger," with channel inventories being cleared and holiday order books up year over year, according to the brokerage.

"With the worst of fundamental pressures appearing to be in the rear-view and a clear go-forward strategy we see plenty of room to run," Truist said. The brokerage has a buy rating on the stock and lifted the price target to $85 from $73.