- Nike reported a weaker-than-expected first quarter for fiscal 2027 and warned that full-year revenue could decline by a high-single-digit percentage as it begins another restructuring.
Nike Inc. (NYSE: NKE) reported $11.21 billion in fiscal first-quarter revenue, down 4% from a year earlier and below Wall Street expectations, while the sportswear company announced additional job cuts as part of a new operating overhaul.
The results, reported after the Oct. 1 market close, showed a mixed quarter for Nike. Earnings per share came in at 48 cents, above the 43-cent analyst estimate cited by CNBC, but revenue fell short of expectations. CNBC's report on Nike's earnings also reported that the company expects another decline in sales for the full fiscal year.
Nike's results came as its turnaround under CEO Elliott Hill continues to face pressure in several major markets.
Nike Revenue Falls as China Remains a Major Weakness
Nike's total revenue declined 4% from $11.72 billion a year earlier. Net income fell 2% to $712 million, while diluted earnings per share declined from 49 cents to 48 cents. The company's gross margin, however, improved to 42.8% from 42.2%, helped primarily by lower warehousing and logistics costs. Selling and administrative expenses fell 3% to $3.91 billion.
The geographic results showed a sharp divergence between North America and some international markets. North America revenue increased 2% to $5.13 billion, while Europe, the Middle East and Africa declined 5% to $3.18 billion.
Greater China was weaker. Revenue in the region dropped 22% to $1.18 billion, or 26% on a currency-neutral basis. Nike Brand wholesale revenue also fell 1% globally, while Nike Direct revenue dropped 8%, including a 13% decline in Nike Brand Digital.
Converse remained another weak area, with revenue falling 28% to $263 million. The latest figures add to the concerns outlined in Wealthier Today's earlier Nike earnings coverage, which examined the company's efforts to rebuild sales and its continued weakness in Greater China.
Nike's inventory stood at $7.85 billion at the end of August, down 3% from a year earlier. The company also held $8.4 billion in cash and short-term investments.
Nike Introduces Pace Restructuring Plan With More Job Cuts
Nike is responding to the sales pressure with a new restructuring program called Pace. The company said the plan will include further streamlining of its organization, modernization of its global supply chain, a new campus in India and a shift to three geographic regions. Nike also said the changes will result in fewer roles across the company, with decisions about affected positions expected to begin in 2027. The number of positions to be eliminated has not been disclosed.
Nike expects Pace to generate approximately $2.5 billion in cumulative savings through fiscal 2031. The company expects about $1 billion in pretax charges associated with the program, primarily employee-related costs, in addition to roughly $300 million of severance costs already recognized in fiscal 2026. The company expects about $300 million of those pretax charges to be recognized in fiscal 2027.
Nike also provided a weaker full-year outlook. It expects fiscal 2027 revenue to decline by a high-single-digit percentage. The company forecast adjusted diluted earnings per share of $1.15 to $1.35, excluding approximately 15 cents of restructuring expenses related to Pace.
Nike said its performance business continued to show momentum, while Sportswear, Jordan Brand and Greater China remained areas requiring additional action. The company is also continuing efforts to reposition its product portfolio and operating structure.
The latest earnings report comes as investors assess whether those changes can eventually stabilize Nike's sales. For now, the company's own guidance points to another year of declining revenue, while its restructuring plan is expected to bring additional costs and workforce changes before the targeted savings are realized.
Nike's next results will provide another measure of how the turnaround is progressing across its major markets and product categories.