Nike beat Wall Street's profit estimate for its fiscal first quarter but warned that fiscal 2027 revenue will fall by a high single-digit percentage, a forecast that may outweigh the earnings beat for investors. The company also unveiled a restructuring plan, called Pace, that will bring layoffs starting in 2027.
Nike reported earnings of 48 cents a share, above the 43 cents analysts had expected, while revenue came in at $11.21 billion, short of the $11.32 billion forecast. The print sent shares down roughly 3% in extended trading Thursday.
Net income fell 2% to $712 million, down from $727 million the year prior, as revenue fell 4% to $11.21 billion. Nike brand revenue took a hit largely due to sustained declines in the China business, where revenue dropped 26%. North America held up better: revenue of $5.13 billion edged past estimates of $5.11 billion, and gross margin came in at 42.8% versus estimates of 42.4%, a metric tracked closely by analysts.
Pace restructuring brings 2027 layoffs
According to CNBC: "position Nike for long-term growth" — the stated goal of Nike's new Pace operating model. The plan will bring layoffs beginning in 2027, centered on supply-chain modernization, reorganizing into three geographies, and a new campus in India. Nike expects the strategy to deliver approximately $2.5 billion in savings through fiscal 2031, though it will add a 15-cent restructuring expense to fiscal 2027 earnings per share.
China drag widens the turnaround test
Profitability in the region also suffered: Greater China earnings before interest and taxes were about $250 million, well below expectations of roughly $310 million. Nike guided to adjusted earnings per share of $1.15 to $1.35 for fiscal 2027 alongside the revenue decline.
These results add pressure to a stock market turnaround already strained outside the earnings sheet. Nike was ejected from the S&P 100 index last month, and the company lost one of its most prominent athletes when Kylian Mbappé ended his 20-year association with Nike to join rival On. Shares have plummeted more than 40% this year.
Chief executive Elliott Hill, who returned to lead Nike two years ago, now has to steer the company through a full year of shrinking sales before any stabilization shows up in the numbers.
Sources: CNBC, BBC News, Investinglive
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