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Nike reported mixed fiscal first-quarter results and unveiled a wide-ranging reorganization that will include layoffs beginning in 2027. The company also trimmed its full-year outlook, forecasting a decline in revenue and narrower adjusted earnings expectations for fiscal 2027.
Quarterly performance: modest beat on profit, revenue slips
Nike posted diluted earnings of 48 cents per share for the quarter, beating the LSEG consensus of 43 cents. Revenue, however, fell 4% to $11.21 billion and missed expectations of $11.32 billion.
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Net income totaled $712 million, down from $727 million a year earlier. The company recorded a gross margin of 42.8%, slightly above the 42.4% analysts had estimated. In after-hours trading, Nike shares slid about 3%.
Greater China drives the weakness
The company said the Nike brand was hurt primarily by continued weakness in China, where revenue dropped roughly 26%. CEO Elliott Hill told analysts the firm is “moving with urgency” to turn around its business in the region.
By contrast, North America revenue held up at $5.13 billion, narrowly topping StreetAccount estimates of $5.11 billion. Still, Nike acknowledged that gains in its performance business have not fully offset declines in other areas.
Pressure on sportswear and lifestyle
Nike’s sportswear segment, which Hill said represented just under half of quarterly sales, fell by a low double-digit percentage. The company also flagged soft consumer traffic in lifestyle categories.
“Despite that progress, our Nike performance business is not yet large enough to offset the pressure we’re seeing in Nike Sportswear, Jordan Brand, and Greater China,” Hill said. He added: “Overall, there’s a lack of energy in the lifestyle space right now, which is impacting traffic.”
Organisation shake-up: ‘Pace’ reorients the company
As part of a plan called Pace, Nike will restructure its operations into three geographic regions — the Americas; the Asia Pacific and Greater China region; and Europe, the Middle East and Africa — and accelerate supply-chain modernization. The company also said it will open a new campus in India and change how work and workforce are organized.
Nike expects the initiative to generate roughly $2.5 billion in savings through fiscal 2031. The company also warned Pace will carry a one-time restructuring charge of 15 cents per share against fiscal 2027 adjusted earnings.
Hill acknowledged the human cost. “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,” he wrote in a letter to employees. The announced cuts represent the third round of layoffs Nike has disclosed this year.
Outlook and investor reaction
For the full fiscal year, Nike now expects revenue to decline by a high-single-digit percentage and projects adjusted earnings per share in a range of $1.15 to $1.35. Those forecasts reflect the company’s efforts to rebalance investment and improve profitability amid mixed consumer demand.
Shares have already been under pressure this year, having fallen more than 40% before the latest results. Investors will be watching whether Pace and the regional reorganization can accelerate decision-making and restore growth in key markets.
