Nike released its fiscal first quarter results on Thursday, posting mixed performance alongside a comprehensive restructuring initiative. The company reported net income of $712 million, representing a 2% decline from the prior year period, while revenue fell 4% to $11.21 billion. The decline was attributed primarily to sustained weakness in the China market, where Nike brand revenues dropped 26%. CEO Elliott Hill indicated the company is moving with urgency to address performance challenges in that region.
North America revenue came in at $5.13 billion, slightly exceeding analyst expectations of $5.11 billion. Gross margin reached 42.8%, surpassing estimates of 42.4%. However, Hill noted that the company’s performance business segment has not yet grown large enough to counterbalance declines in sportswear, Jordan Brand, and Greater China operations. The sportswear segment, which accounted for just under half of quarterly revenue, experienced a low-double digit percentage decline. Hill attributed part of the weakness to a general lack of momentum in the lifestyle category and cautious consumer behavior, while emphasizing the company’s responsibility to drive innovation in the space.
Looking ahead, Nike provided full-year guidance for fiscal 2027, projecting revenue declines in the high-single digit percentage range and adjusted earnings per share between $1.15 and $1.35. The company announced a restructuring strategy called Pace designed to position the company for long-term growth. This initiative will result in layoffs beginning in 2027, marking the third round of workforce reductions the company has announced this year, though specific job cut numbers were not disclosed.
The Pace strategy encompasses supply chain modernization, reorganization into three geographic regions, construction of a new campus in India, and changes to work structures and workforce composition. Nike projects the initiative will generate approximately $2.5 billion in savings through fiscal 2031, while incurring a 15-cent restructuring charge to fiscal 2027 earnings per share. Hill stated the strategy aims to streamline decision-making and accelerate market responsiveness while preserving capacity for athlete-focused innovation and brand development. Following the announcement, Nike shares declined roughly 3% in extended trading.
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