Nike shares dropped 8.5% in extended trading Thursday after the sportswear giant reported weaker-than-expected fiscal first-quarter sales and issued a gloomier full-year outlook, while announcing another restructuring program that will eliminate additional jobs.
Nike reported fiscal Q1 revenue of $11.21 billion, down 4% year over year and below Wall Street's $11.32 billion estimate. Diluted earnings were $0.48 per share, while gross margin improved 60 basis points to 42.8%, helped by lower warehousing and logistics costs.
The bigger shock came from guidance: Nike now expects fiscal 2027 revenue to decline by a high single-digit percentage, compared with analysts’ prior expectation of roughly a 2% fall. Adjusted earnings are forecast at $1.15 to $1.35 per share.
Greater China revenue fell 26% on a currency-neutral basis, extending the region’s decline to a ninth consecutive quarter. North America rose 2%, helped by growth in performance categories, but CEO Elliott Hill said the performance business is not large enough to offset weakness in Sportswear, Jordan Brand and Greater China.
Nike also unveiled Pace, an operating-model overhaul that includes supply-chain modernization, a new campus in India, consolidation from four geographic divisions to three, and organizational streamlining. The company expects Pace to produce about $2.5 billion in cumulative savings through fiscal 2031, but it will also bring around $1 billion of pre-tax charges, primarily employee-related. Hill told staff the changes would mean fewer roles across Nike, with decisions beginning in calendar 2027. That follows roughly 2,200 job cuts earlier in 2026.
Short interest had climbed to a record high before the report, with about 87 million shares sold short according to S3 Partners, up from about 32 million a year earlier. Some analysts had expected a possible short squeeze on a strong beat, but the weak guidance dashed that scenario. CFRA analyst Zach Warring said it was “a quarter you'd expect from a new CEO three or four quarters in, but not two years in.”
Jefferies had previously expected revenue near $11.5 billion and adjusted earnings of 48 cents per share, above consensus, but actual revenue missed even the lower consensus estimate. Bank of America recently downgraded Nike to Underperform and cut its price target to $30 from $47.
