Nike released mixed results for its fiscal first quarter on Thursday, with the company posting net income of $712 million, a 2% decline from $727 million in the prior year period. Revenue decreased 4% to $11.21 billion, falling short of expectations as the company faced significant headwinds in key markets.
The performance business recorded its largest decline in the Greater China region, where Nike brand revenues dropped 26%. Chief Executive Elliott Hill acknowledged the urgency of addressing this deterioration during an analyst call. Offsetting some challenges, North America revenue reached $5.13 billion, slightly exceeding analyst estimates of $5.11 billion. The company’s gross margin came in at 42.8%, surpassing the estimated 42.4%.
Looking ahead, Nike provided guidance indicating it expects revenues to decline by a high-single digit percentage in fiscal 2027, with adjusted earnings per share projected between $1.15 and $1.35. The company attributed revenue weakness partly to reduced momentum in the sportswear segment and the Jordan Brand, while CEO Hill noted a broader lack of energy in the lifestyle consumer market affecting store traffic.
Nike announced a comprehensive restructuring initiative called Pace designed to position the company for long-term growth. The plan will involve organizational changes, geographic realignment, supply chain modernization, and workforce adjustments beginning in 2027, though specific headcount reduction numbers were not disclosed. The company projects the strategy will generate approximately $2.5 billion in savings through fiscal 2031, while carrying a one-time restructuring charge of 15 cents per share against fiscal 2027 earnings. This marks the third round of layoff announcements Nike has made during the year.
Stock market reaction was negative, with Nike shares declining roughly 3% in extended trading following the announcement. The decline extends a broader downward trend, with shares having fallen more than 40% so far in the year amid macroeconomic pressures affecting consumer spending.
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