NIKE beats by $0.04, reports revs in-line; guides FY27 EPS below consensus; FY27 revenue expected to decline high-single digits (35.15 -0.25)
- Reports Q1 (Aug) earnings of $0.48 per share, $0.04 better than the FactSet Consensus of $0.44; revenues fell 4.3% year/year to $11.21 bln vs the $11.32 bln FactSet Consensus.
- NIKE Brand revenues were $11.0 billion, down 4 percent on a reported and currency-neutral basis, primarily due to declines in Greater China and EMEA, partially offset by growth in North America.
- NIKE Brand wholesale revenues were $6.8 billion, down 1 percent on a reported and currency-neutral basis, primarily due to declines in Greater China, partially offset by growth in North America.
- NIKE Direct revenues were $4.1 billion, down 8 percent on a reported basis and down 9 percent on a currency-neutral basis, due to a 13 percent decrease in NIKE Brand Digital and a 5 percent decrease in NIKE-owned stores.
- Revenues for Converse were $263 million, down 28 percent on a reported and currency-neutral basis, due to declines across all territories.
- Gross margin expanded 60 basis points to 42.8 percent, primarily due to lower warehousing and logistics costs.
- Inventories for NIKE, Inc. were $7.8 billion, down 3 percent, primarily reflecting shifts in product mix.
- Co issues downside guidance for FY27, sees EPS of $1.15-1.35, excluding non-recurring items, vs. $1.67 FactSet Consensus. Revenues are expected to decline high-single digits in fiscal 2027.
--> NIKE reveals Pace operating model transformation
- Pace is an operating model transformation to accelerate and scale the success of the Sport Offense. The program includes and builds upon the previous cost realignment plan announced in March 2026. Pace includes efforts to modernize NIKE's global supply chain, the establishment of a new campus in India to fuel its enterprise capabilities, a realignment to three geographies, and further streamlining of the organization to reduce costs.
- NIKE expects Pace to deliver approximately $2.5 billion in cumulative savings through fiscal 2031, with approximately $1.0 billion of pre-tax charges, primarily consisting of employee-related costs, through fiscal 2031, in addition to approximately $0.3 billion of severance costs recognized in fiscal 2026. NIKE expects approximately $0.3 billion to be recognized in fiscal 2027.
On Call : NIKE guidance commentary on call
- Co currently expects revenues to decline in the high single digit range. Co is making deliberate choices across portions of the portfolio, particularly in Nike sportswear, the Jordan brand and Greater China to improve the health of these businesses over time.
- Co will continue to take actions to reduce supply across key parts of the marketplace in support of a healthier marketplace environment and stronger full price realization. Co expects those actions will create pressure on reported revenues for for the remainder of fiscal 27 and into 28.
- Co currently expects Ebit to decline by a greater percentage than revenue. This outlook reflects continued pressure on gross margin and fixed cost deleverage associated with lower revenue levels.
---> Q1 2027 NKE Earnings Call Guidance
- For fiscal 2027, revenues are expected to decline in the high single-digit range YOY, with deliberate supply reductions in NIKE Sportswear, Jordan Brand, and Greater China creating pressure on reported revenues for the remainder of fiscal 2027 and into 2028; Q2 revenues will face an approximate 400 basis point headwind from lapping prior-year EMEA Cyber Week promotions and higher North America sell-in.
- For fiscal 2027, EBIT is expected to decline by a greater percentage than revenue, reflecting continued pressure on gross margin and fixed cost deleverage associated with lower revenue levels, partially offset by disciplined expense management.
- For fiscal 2027, adjusted EPS is expected to be in the range of $1.15 to $1.35, excluding approximately $0.15 of impact from the Pace program.
- FactSet FY27 EPS consensus is $1.67.
Full Q1 2027 NKE Earnings Call Summary
Date of Call: October 1, 2026
Financials Results:
- Q1 revenue was $11.2B, down 4% reported and 5% currency-neutral YOY.
- By geography: Greater China revenue declined 26% YOY; EMEA declined 5% YOY; APLA was flat YOY; North America grew 2% YOY.
- NIKE Sportswear, which accounted for just under half of quarterly revenue, declined low double-digits YOY.
- Jordan Brand represented 13% of global business in Q1, with revenue falling by mid-teens YOY.
- NIKE performance business grew high single-digits YOY; excluding the reset in Greater China, NIKE performance would have been up low double-digits YOY.
- Performance growth was driven by double-digit increases in running, global football, tennis, and golf; basketball was up double-digits in North America.
- Gross margin was 42.8%, up 60 basis points YOY.
- SG&A declined 3% YOY on a reported basis.
- EPS was $0.48, down 2% versus last year.
- Company entered the quarter in a net cash position with $8.4B in cash and short-term investments and leverage at roughly 2x.
- Returned approximately $610M to shareholders through dividends in the quarter.
- NIKE performance portfolio reached $16B last fiscal year and grew high single-digits in Q1.
- World Cup-related performance: World Cup team kits sales doubled versus the 2022 tournament; club football kits were up high-teens YOY.
Guidance:
- For fiscal 2027, revenues are expected to decline in the high single-digit range YOY, with deliberate supply reductions in NIKE Sportswear, Jordan Brand, and Greater China creating pressure on reported revenues for the remainder of fiscal 2027 and into 2028; Q2 revenues will face an approximate 400 basis point headwind from lapping prior-year EMEA Cyber Week promotions and higher North America sell-in.
- For fiscal 2027, EBIT is expected to decline by a greater percentage than revenue, reflecting continued pressure on gross margin and fixed cost deleverage associated with lower revenue levels, partially offset by disciplined expense management.
- For fiscal 2027, adjusted EPS is expected to be in the range of $1.15 to $1.35, excluding approximately $0.15 of impact from the Pace program.
- Management emphasized a “Sport Offense” strategy, with NIKE performance categories (running, global football, training, basketball, tennis, golf) delivering strong double-digit growth in multiple sports, but not yet large enough to offset pressure in Sportswear, Jordan Brand, and Greater China.
- NIKE Sportswear weakness was attributed to deliberate pullbacks (nearly 50% reduction in “dock” revenue, creating a ~$200M headwind), product underperformance, and broader lifestyle marketplace softness; management is segmenting Sportswear around distinct consumer groups to avoid a “sea of sameness” and build a deeper bench of winning franchises.
- Jordan Brand is being repositioned by restoring scarcity in retro product; NIKE acknowledged oversupplying iconic retros and plans to deliberately reduce volume and frequency of specific launches, with North America seeing the largest near-term impact, to support more profitable and sustainable growth.
- Greater China is undergoing a structural reset: revenue declined 26% as NIKE cleans up digital distribution, exits channels misaligned with its strategy, and concentrates on official NIKE and Jordan flagships on Tmall, JD, Douyin, nike.com, and the NIKE app; this is expected to pressure revenues and profitability for multiple seasons while improving brand premium and inventory health.
- Physical retail in Greater China is being upgraded after years without refresh; Shanghai House of Innovation has delivered 10 consecutive months of growth after elevating the experience and leading with sport.
- Running momentum is supported by innovation in Max Cushioning (Vomero franchise nearly tripled share of the category over the past year) and a slate of new products (Pegasus Plus 2, Alphafly 4, Swooshfly, Nike Apex) targeted at specific runner types, distances, and goals.
- Global football benefited from World Cup energy and a refreshed marketplace, driving strong double-digit growth across all four geographies and high-teens growth in club kits, with a strategy to convert event-driven demand into recurring club-level purchases.
- Training is highlighted as a major untapped opportunity, with strong performance from Nike Mind, Nike Pro, Metcon, and the new Nike Hybrid footwear system for hybrid training; recovery innovation is being broadened via the Hyperslide from the Nike x Hyperice partnership.
- Women’s basketball is a key growth vector: women’s signature business grew nearly 500% from FY 2022 to FY 2026; the Caitlin 1 is NIKE’s largest women’s signature launch ever, rolling out in 5,000 doors (twice the typical signature distribution) and anchoring the holiday product campaign.
- The “Pace” program is a multi-year operating model transformation aimed at accelerating the Sport Offense, improving speed-to-market, streamlining decisions, and lowering the cost base; it targets approximately $2.5B in savings, with about $1B in implementation costs over the program’s life in addition to ~$300M of severance costs in fiscal 2026, and majority of savings expected in FY 2029–2030, continuing into FY 2031.
- Pace includes evolving the supply chain from a mostly fixed to a more flexible and responsive structure, establishing a new campus in Bengaluru, India to drive capabilities and operational excellence, and reorganizing into three geographies (Americas, APGC, EMEA) with fewer layers and more local decision-making, expected to be in place in FY 2028.
- Workforce structure will change under Pace, with some capabilities added and duplicative roles eliminated, ultimately reducing the overall number of roles while freeing capacity to invest in consumer-facing innovation and brand strength.
- Management reiterated a disciplined capital allocation framework, prioritizing investments that strengthen the business and improve returns, while maintaining the dividend as a key component of shareholder returns.
- NIKE highlighted on-the-ground activations (e.g., University of Texas vs. Ohio State) as examples of “surrounding a moment” by integrating running, training, football, Sportswear, NIL programs, and retail partners to deepen local relevance and leverage its extensive university partnership network.
Sentiment Analysis:
- Prepared remarks: Tone acknowledged that “results have fallen short of expectations” and that “our results are below both our expectations and our potential,” while emphasizing that Q1 was “in line with our expectations” and that the Sport Offense is “delivering measurable progress.” Management repeatedly framed current actions in terms of “deliberate choices,” “discipline and urgency,” and “building NIKE the right way for the long term,” signaling willingness to accept near-term revenue and margin pressure to restore brand health and premium positioning.
- Q&A tone: Not directly observable from the provided excerpt, but the setup before Q&A stressed a desire to give investors a “clear framework” and to update full-year expectations over time, suggesting an intent to be more transparent and grounded in “realities of the business” during questioning.
- Note any sentiment shift: Across the prepared remarks, there is a contrast between candid recognition of “significant work ahead” in Sportswear, Jordan, and Greater China and more upbeat language around performance categories, innovation pipelines, and the Pace program’s long-term benefits. The narrative shifts from near-term caution (high single-digit revenue decline, EBIT down more than revenue) to longer-term opportunity, with management positioning current resets and cost actions as necessary steps to “restore the business to stronger financial health” and “unlock new growth opportunities.”
Q&A:
Question from Simeon Siegel (Guggenheim Securities): Asked for sizing of performance vs. Sportswear and Jordan in the U.S. to reconcile mixed category commentary with North America revenue and EBIT margin inflection, and then asked Dave to comment on his confidence in the guidance and how much he has been able to learn so far.
Response: Management said the sport offense is working, with performance delivering broad-based high single-digit growth in Q1 across all key sports and driving North America’s 2% growth, supported by strong sell-through across channels; they highlighted innovation, aligned execution by sport and country, and recent launches as proof points. Dave added that guidance reflects a bottoms-up, comprehensive business and financial plan review incorporating current trends, risks, and actions, and that he feels very confident in the earnings range and the organization’s accountability for delivering both this year and over the long term.
Question from Brooke Roach (Goldman Sachs): Asked for more detail on the magnitude and cadence of expected pressure in Greater China relative to the 26% Q1 decline, and whether further strategic actions beyond the NIKE Digital reset are needed to improve the business.
Response: Management said they are in the midst of a marketplace reset in China aimed at becoming more premium and culturally relevant, with sport-led categories like Running growing double digits and benefiting from localized experiences, while they aggressively clean up and elevate both digital and physical distribution and invest in local product creation. They cautioned that revenue and profitability in China will remain under pressure near term as they eliminate unprofitable, brand-dilutive channels and reset assortments, and Dave specified that their guidance assumes China revenue gets worse for the balance of the year to ensure a healthier long-term business.
Question from Jay Sole (UBS Securities): Sought more specific help on Q2 revenue and gross margin expectations beyond the 400 bps headwind comment, and asked where gross margin might land for fiscal 2027 given SG&A is guided down year-over-year and an unusual Q4 compare.
Response: Dave said they are not providing specific gross margin guidance for the year but noted constructive tailwinds from supply chain and sourcing initiatives that bolster margin, offset by discounts and marketplace resets that dampen it, creating a push-pull dynamic. For Q2, he highlighted tough comparisons to last year’s Cyber Week in Europe and North America sale activity, which will pressure sequential growth rates, and indicated that this is the main lens through which to view Q2 performance.
Question from Bob Drbul (BTIG): Asked for more color on the decision to let Kylian Mbappé leave the NIKE roster and for greater clarity on the basketball game plan, particularly around signature basketball and the addition of Shai Gilgeous-Alexander.
Response: Management said they are proud of their two-decade relationship and shared achievements with Mbappé, wish him well, and remain confident in NIKE Football given its strong athlete, federation, and product portfolio. On basketball, they emphasized a strategy to “dimensionalize” the category across men’s and women’s, citing explosive growth in women’s basketball, the record Caitlin Clark signature launch at 5000 doors, the SHAI 002 launch, and the GT series, and noted they are already seeing basketball growth in North America as a performance opportunity.
Question from Sam Poser (Williams Trading): Asked three things: regional sales expectations for the year relative to Q1, targeted speed-to-market improvements under the PACE project (currently around 18 months), and whether most sub-$100 “family channel” product is in Sportswear.
Response: Management explained that core “family footwear” spans entry-level product across Running, Basketball, Training, and Sportswear in the $65–$85 range and is not limited to Sportswear, with teams making good progress there. On PACE, they described it as an operating model shift to scale the sport offense by getting closer to athletes and markets via supply chain work, a new India capability center, moving from four to three geographies, and reshaping the workforce, with more detail to come at Investor Day; Dave added that PACE is designed to increase operating profit leverage over time and that while they won’t give regional guidance, actions in China will further dampen that region’s growth versus Q1 for the rest of the year.
Question from Alex Straton (Morgan Stanley): Asked Elliott to reflect on what he may have underappreciated about challenges in Jordan, China, and Sportswear since his return, given limited progress and some worsening, and what gives him confidence that the revised strategies outlined now are the right ones.
Response: Elliott said they have strengthened NIKE’s foundation and clarified its long-term direction, but that a turnaround at their scale is an ongoing, granular process requiring time and resource reallocation. He acknowledged underappreciating the need to break Sportswear into distinct consumer segments, outlined efforts to reposition Jordan by restoring retro scarcity and expanding into performance sports, and described China actions focused on sport-led innovation and decisive marketplace cleanup, expressing confidence these strategies will build healthier, more durable businesses and promising more detail at Investor Day.
Question from Matthew Boss (JPMorgan): Asked Elliott to elaborate on the “pain before gain” dynamic, including which segments may further moderate due to strategic actions and how long that lasts, and then asked if PACE benefits would show up in the P&L by fiscal 2029.
Response: Dave said deliberate actions in Sportswear, Jordan, and China will dampen performance through the balance of this year and likely into early fiscal 2028, but are necessary to restore business health and drive outsized long-term shareholder value. On PACE, he noted they are already seeing savings, particularly in supply chain-related gross margin improvements, and that while benefits will ramp over time, maximum savings are expected to be realized in 2029 and 2030.
Question from Michael Binetti (Evercore ISI): Asked for clarification on what “multiple seasons” means for the China reset and whether there is a path to total company revenue growth turning positive in fiscal 2028, and then questioned dividend priorities given near-term top-line challenges and a payout ratio that appears above 100% at the guidance midpoint.
Response: Dave stressed that the dividend is a very significant capital allocation priority and that under all scenarios they plan to support maintaining and ultimately growing it over time. On the broader revenue and China questions, he deferred detailed commentary until November, when they will present a multi-year financial algorithm at Investor Day covering top-line and bottom-line expectations for 2027 and the subsequent five years.