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NKE Q1 Earnings Call Flags Deeper Reset Before Recovery
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Key Takeaways
Nike sees fiscal 2027 revenues falling in the high single digits, with adjusted EPS of $1.15-$1.35.
Sportswear fell low double digits, while Jordan Brand declined in the mid-teens.
Greater China revenues fell 26%, with reset pressure expected to intensify through fiscal 2027.
NIKE, Inc. (NKE - Free Report) used its fiscal first-quarter 2027 earnings call to reinforce a two-track story: performance categories are gaining traction, while Sportswear, Jordan Brand and Greater China remain under pressure. CEO Elliott Hill said the company is prioritizing marketplace health over near-term volume.
CFO David Denton also introduced a clearer financial framework, including full-year guidance and a multiyear cost program, while warning that restructuring pressure will extend into fiscal 2028.
NKE Sets a Lower Near-Term Revenue Base
For the quarter, earnings per share of $0.48 beat the Zacks Consensus Estimate of $0.43. Revenues totaled $11.21 billion, which missed the Zacks Consensus Estimate of $11.40 billion.
Denton said fiscal 2027 revenues are expected to decline in the high-single-digit range. Adjusted earnings per share are projected to be in the range of $1.15-$1.35, excluding about $0.15 of impact from the Pace program.
He added that second-quarter growth will face roughly 400 basis points of pressure from comparisons with prior-year Cyber Week promotions in EMEA and North America sell-in activity.
Nike Leans on Performance as Lifestyle Resets
Hill said NIKE Performance grew in the high single digits after reaching $16 billion in fiscal 2026. Running, Global Football, tennis and golf posted double-digit growth, while North America basketball also advanced.
Sportswear, which represented just under half of quarterly revenue, fell low double digits. Hill said the planned reduction in Dunk revenues of nearly 50% created an approximately $200 million headwind.
Jordan Brand represented 13% of the global business and declined in the mid-teens. Hill said Nike will reduce selected retro launch volumes and frequency to restore scarcity and improve marketplace balance.
NKE Expects China Pressure to Intensify
Greater China revenues fell 26%. Hill said Nike is narrowing digital distribution around higher-quality flagship experiences while working with partners to improve physical retail.
The reset includes removing digital channels that management views as promotional or inconsistent with its marketplace strategy. Hill also highlighted locally designed products as part of its efforts to improve relevance.
In Q&A, a Goldman Sachs analyst asked about the pressure ahead. Denton said fiscal 2027 guidance assumes Greater China revenue performance worsens from the first-quarter rate as reset actions continue.
Nike Targets $2.5 Billion of Pace Savings
Denton said the Pace operating-model program is expected to generate about $2.5 billion in savings, with approximately $1 billion of implementation costs over the program's life.
Most savings are expected in fiscal 2029 and fiscal 2030, with full realization continuing into fiscal 2031. Denton said part of those savings will be reinvested in opportunities with strong strategic impact and returns.
Hill said Pace will also reshape Nike's geographic structure and establish a new campus in Bengaluru, India, while reducing organizational layers and moving resources closer to local markets.
NKE Faces Questions on Timing and Execution
A Morgan Stanley analyst questioned why Sportswear, Jordan and China remain major pressure points. Hill said he had underappreciated the need to divide Sportswear into more distinct consumer segments.
A JPMorgan analyst asked about the duration of the reset. Denton said pressure from the three areas should persist through fiscal 2027 and extend into fiscal 2028.
An Evercore ISI analyst raised dividend sustainability. Denton said the dividend remains a significant capital-allocation priority and that Nike's planning scenarios support maintaining and ultimately growing it.
Nike Keeps Focus on Marketplace Health
Hill's message centered on scaling the Sport Offense model through sharper consumer segmentation, sport-led innovation and localized execution. Management framed current actions as steps toward stronger full-price realization and healthier distribution.
Denton emphasized discipline, productivity and accountability rather than a quick rebound. Nike plans to provide a longer-term financial algorithm and further detail on portfolio priorities at its November Investor Day.
Zacks Rank and Style Scores Give Mixed Signals
NKE currently has a Zacks Rank #5 (Strong Sell). Under the Zacks framework, that rank reflects unfavorable earnings-estimate revision trends and takes precedence over otherwise favorable style characteristics.
The stock has a Growth Score of A, Value Score of C, Momentum Score of F and VGM Score of B. The A Growth and B VGM scores are favorable within the Style Scores system, while the F Momentum score is weak. The Zacks Rank can change as analysts revise estimates following the just-reported results.
View the Zacks #1 Rank List
Image: Bigstock
NKE Q1 Earnings Call Flags Deeper Reset Before Recovery
Key Takeaways
NIKE, Inc. (NKE - Free Report) used its fiscal first-quarter 2027 earnings call to reinforce a two-track story: performance categories are gaining traction, while Sportswear, Jordan Brand and Greater China remain under pressure. CEO Elliott Hill said the company is prioritizing marketplace health over near-term volume.
CFO David Denton also introduced a clearer financial framework, including full-year guidance and a multiyear cost program, while warning that restructuring pressure will extend into fiscal 2028.
NKE Sets a Lower Near-Term Revenue Base
For the quarter, earnings per share of $0.48 beat the Zacks Consensus Estimate of $0.43. Revenues totaled $11.21 billion, which missed the Zacks Consensus Estimate of $11.40 billion.
NIKE, Inc. Price, Consensus and EPS Surprise
NIKE, Inc. price-consensus-eps-surprise-chart | NIKE, Inc. Quote
Denton said fiscal 2027 revenues are expected to decline in the high-single-digit range. Adjusted earnings per share are projected to be in the range of $1.15-$1.35, excluding about $0.15 of impact from the Pace program.
He added that second-quarter growth will face roughly 400 basis points of pressure from comparisons with prior-year Cyber Week promotions in EMEA and North America sell-in activity.
Nike Leans on Performance as Lifestyle Resets
Hill said NIKE Performance grew in the high single digits after reaching $16 billion in fiscal 2026. Running, Global Football, tennis and golf posted double-digit growth, while North America basketball also advanced.
Sportswear, which represented just under half of quarterly revenue, fell low double digits. Hill said the planned reduction in Dunk revenues of nearly 50% created an approximately $200 million headwind.
Jordan Brand represented 13% of the global business and declined in the mid-teens. Hill said Nike will reduce selected retro launch volumes and frequency to restore scarcity and improve marketplace balance.
NKE Expects China Pressure to Intensify
Greater China revenues fell 26%. Hill said Nike is narrowing digital distribution around higher-quality flagship experiences while working with partners to improve physical retail.
The reset includes removing digital channels that management views as promotional or inconsistent with its marketplace strategy. Hill also highlighted locally designed products as part of its efforts to improve relevance.
In Q&A, a Goldman Sachs analyst asked about the pressure ahead. Denton said fiscal 2027 guidance assumes Greater China revenue performance worsens from the first-quarter rate as reset actions continue.
Nike Targets $2.5 Billion of Pace Savings
Denton said the Pace operating-model program is expected to generate about $2.5 billion in savings, with approximately $1 billion of implementation costs over the program's life.
Most savings are expected in fiscal 2029 and fiscal 2030, with full realization continuing into fiscal 2031. Denton said part of those savings will be reinvested in opportunities with strong strategic impact and returns.
Hill said Pace will also reshape Nike's geographic structure and establish a new campus in Bengaluru, India, while reducing organizational layers and moving resources closer to local markets.
NKE Faces Questions on Timing and Execution
A Morgan Stanley analyst questioned why Sportswear, Jordan and China remain major pressure points. Hill said he had underappreciated the need to divide Sportswear into more distinct consumer segments.
A JPMorgan analyst asked about the duration of the reset. Denton said pressure from the three areas should persist through fiscal 2027 and extend into fiscal 2028.
An Evercore ISI analyst raised dividend sustainability. Denton said the dividend remains a significant capital-allocation priority and that Nike's planning scenarios support maintaining and ultimately growing it.
Nike Keeps Focus on Marketplace Health
Hill's message centered on scaling the Sport Offense model through sharper consumer segmentation, sport-led innovation and localized execution. Management framed current actions as steps toward stronger full-price realization and healthier distribution.
Denton emphasized discipline, productivity and accountability rather than a quick rebound. Nike plans to provide a longer-term financial algorithm and further detail on portfolio priorities at its November Investor Day.
Zacks Rank and Style Scores Give Mixed Signals
NKE currently has a Zacks Rank #5 (Strong Sell). Under the Zacks framework, that rank reflects unfavorable earnings-estimate revision trends and takes precedence over otherwise favorable style characteristics.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock has a Growth Score of A, Value Score of C, Momentum Score of F and VGM Score of B. The A Growth and B VGM scores are favorable within the Style Scores system, while the F Momentum score is weak. The Zacks Rank can change as analysts revise estimates following the just-reported results.