Nintendo has had an unusual financial quarter since April, recording a decrease in year-on-year sales, but a 150% boost in operating profits, to which it gives its thanks to a $300 million refund in US tariffs – the same money it's already made very clear it isn't planning to pass back to customers.
In Nintendo's latest financial results, the company explains that net sales are down year-on-year for the quarter by 9.5%, but "operating profit rose by 150.5% to 142.5 billion yen, ordinary profit rose by 115.1% to 206.1 billion yen, and profit attributable to owners of parent rose by 53.5% to 147.4 billion yen."
It continues: "We recorded approximately 300 million U.S. dollars as a reduction of cost of sales in connection with refunds of IEEPA tariffs. The tariffs related to the refunds were primarily borne by the company rather than passed on to consumers through product prices."
These tariff refunds, which came after the company sued the US government back in March, also impacted Nintendo's gross profit numbers. Its gross profit margin went up to 54.3%, "reflecting solid software sales and the resulting increase in the proportion of software in net sales, as well as refunds of U.S. tariffs imposed under IEEPA that had previously been recorded as cost of sales, among other factors."
The timing of this is particularly interesting, as it comes a few short weeks since Nintendo requested a dismissal of a class action lawsuit filed "on behalf of millions of consumers who purchased goods from Nintendo during the tariff period and who paid inflated prices" – like the Switch 2 accessories that increased in price in the US before the console was even out, and the Switch 1 consoles that saw increases shortly after. The lawsuit sought "restitution of those tariff overcharges, together with appropriate declaratory, injunctive, and monetary relief."
Nintendo, however, wasn't on board with this, stating in a filing that customers "received exactly what they bargained and paid for" when buying price-hiked products, and that "if a consumer did not want to pay the advertised price, they were free to abstain from purchasing the product or seek out competing products."
Reading Nintendo's latest financial results, I can't help but wonder if the company is getting ahead of any potential criticism here when it notes that the "tariffs related to the refunds were primarily borne by the company rather than passed on to consumers through product prices," essentially clarifying that its new $300 million refund isn't just a double in earnings from its price hikes like the individuals who filed the lawsuit suggested.
Back in April, it was alleged: "Nintendo stands to recover the same tariff payments twice – once from consumers through higher prices and again from the federal government through tariff refunds, including interest paid by the government on those funds."
In its request for dismissal, Nintendo noted that last year's price increases weren't all the result of tariffs, either. Other factors, including surging memory costs, the price of shipping, and labor, also impacted the company's prices, it was stated.
