Nike is in a turnaround: CEO Elliott Hill is reorganizing the company around the “Sport Offense,” rebuilding wholesale distribution and product momentum while trying to repair weak digital sales, Greater China and Converse. The recovery remains uneven, with published expectations calling for another declining-sales quarter and Greater China still a major drag.
The quarter missed on the top line, even though EPS beat. Revenue fell 4% year over year to $11.213 billion, below published consensus of roughly $11.4 billion, while diluted EPS was $0.48 versus consensus near $0.44. The filing itself described results as “consistent with our expectations,” but that is weaker than the external benchmark because the EPS outperformance came alongside continued sales contraction and a 13% decline in NIKE Brand Digital.
| Metric | Q1 FY27 | Q1 FY26 | Change / comparison |
|---|---|---|---|
| Revenue | $11.213B | $11.720B | -4%; below ~$11.4B consensus (Consolidated Statements of Income) |
| Diluted EPS | $0.48 | $0.49 | Down from $0.49; above ~$0.44 consensus (Consolidated Statements of Income) |
| Gross margin | 42.8% | 42.2% | +60 bps (Consolidated Statements of Income) |
| Net income | $712M | $727M | -2% (Consolidated Statements of Income) |
| Greater China revenue | $1.180B | $1.512B | -22%, or -26% currency-neutral (Divisional Revenues) |
| Nike Brand revenue | $10.952B | $11.362B | -4% (Divisional Revenues) |
| NIKE Direct revenue | $4.142B | $4.514B | -8%, or -9% currency-neutral (Channel Revenues) |
The margin improvement is real, but it is not yet a growth recovery. Gross margin expanded 60 basis points and operating overhead fell 6%, helping EBIT remain roughly flat despite the revenue decline. That shows Nike is extracting efficiency, but the mix is still unfavorable: Greater China revenue dropped 22%, Converse fell 28%, and Nike Direct declined 8%. The business is stabilizing profitability through cost control while the product and demand reset remains incomplete.
Pace makes the cost reset much larger and longer-lasting. Nike now expects approximately $2.5 billion of cumulative savings through fiscal 2031, against approximately $1.0 billion of new pre-tax charges, plus $0.3 billion of severance already recognized in fiscal 2026. About $0.3 billion of the new charges is expected in fiscal 2027, with the rest spread through fiscal 2031.
The program supports the turnaround, but also signals that Nike’s problems are broader than a product refresh. Pace includes supply-chain modernization, a new India campus, a shift to three geographies and additional organizational streamlining. Because the March 2026 cost plan was already known, the surprise is mainly the scale, duration and explicit savings target—not the decision to restructure. The savings are stated before future reinvestment, and Nike warns that execution, local-law requirements and workforce disruption could change the numbers. 〔0〕
Bottom line: This was a mixed quarter: Nike beat the low EPS bar through margin and cost discipline, but sales missed and core weak spots—especially Greater China and Direct—remain unresolved. Pace adds a credible efficiency lever, but it also confirms that the turnaround will require years of restructuring rather than a quick demand rebound.
Read the original 8-K on SEC EDGAR ↗