Nike delivered a disappointing scorecard after Thursday's close. Fiscal first-quarter revenue came in at $11.21 billion, down 4 percent from a year earlier and below Wall Street's $11.32 billion expectation. Net income was $712 million, down 2 percent from $727 million a year ago; diluted earnings were $0.48 a share. The lone bright spot: gross margin improved 60 basis points to 42.8 percent, helped by lower warehousing and logistics costs.
The real shock was guidance. Nike expects fiscal 2027 revenue to decline by a high single-digit percentage — far worse than analysts' previous expectation of roughly a 2 percent fall — with adjusted earnings forecast at $1.15 to $1.35 a share. Shares sank 8.5 percent in extended trading Thursday, slid more than 10 percent in Friday premarket, and are down nearly 45 percent this year. Forbes put the stock near a 13-year low, with about $2.5 billion in market value wiped out.
The ugliest line in the report was Greater China: sales fell 26 percent on a constant-currency basis. Growth in North America partially offset the slide, but not nearly enough. "Our Nike performance business is not yet large enough to offset the pressure we're seeing in Nike sportswear, Jordan brand, and Greater China," CEO Elliott Hill said on the post-earnings call.
Analysts say Nike's troubles stem largely from a failure to release enough new, compelling products, forcing an uptick in promotions and discounts. "A quarter you'd expect from a new CEO three or four quarters in, but not two years in," CFRA analyst Zach Warring told Yahoo Finance. Hill has spent nearly two years rebuilding Nike around sport, innovation and stronger wholesale relationships — but the market is running out of patience.
Alongside earnings came a new operating model called "Pace": modernizing the global supply chain, consolidating from four geographic divisions to three (Americas, Asia Pacific and Greater China, and EMEA), opening a new campus in India "with strong capabilities and access to talent," and streamlining the organization. Nike expects the program to produce about $2.5 billion in cumulative savings through fiscal 2031.
The price is jobs. "This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty. I don't take that lightly," Hill said in a separate announcement Thursday. The company does not yet know how many roles will be cut; notifications begin in calendar year 2027.
Hill said reviving the weak spots — sportswear, Jordan, Greater China — "will take time," pointing to a deliberate reduction in the volume of Jordan retro launches. What comes next is whether Pace can actually stop the bleeding: for a stock that has failed to return to growth two years into a turnaround, investors want numbers, not just plans.