A $1.15 to $1.35 earnings outlook and a new restructuring program overshadowed better margins. The shares fell about 9% after hours.
Nike delivered a first-quarter profit above expectations on Thursday and then told investors the rest of its fiscal year would be considerably worse than they had modeled.
For the quarter ended Aug. 31, the sportswear company earned $0.48 a share, down from $0.49 a year earlier and ahead of the roughly $0.44 analysts had forecast. Revenue fell 4% to $11.21 billion, about $107 million short of the $11.32 billion consensus. Gross margin widened 60 basis points to 42.8%, helped by lower warehousing and logistics costs, and overhead spending fell 6%.
The guidance did the damage. Nike now expects fiscal 2027 revenue to decline by a high-single-digit percentage and adjusted earnings of $1.15 to $1.35 a share, excluding about $0.15 of restructuring costs. Analysts had been looking for about $1.66. The midpoint of the new range is roughly 25% below that figure. Shares, which closed at $35.15 before the release, fell about 9% in after-hours trading, extending a slide that had already taken the stock to its lowest level in 13 years.
Pace: savings first, costs now
Alongside the outlook, Nike unveiled a restructuring program called Pace. The company expects about $2.5 billion in cumulative savings through fiscal 2031, against about $1.0 billion of pre-tax charges plus roughly $0.3 billion in severance. Nike will reorganize into three geographies and open a new campus in India. Chief Executive Elliott Hill said on the call that the plan "will result in fewer roles across Nike."
On paper, the program returns nearly $2 in savings for every $1 spent. The catch is timing: management indicated the largest savings arrive in fiscal 2029 and 2030, while charges and lost revenue land now.
Where the weakness sits
Greater China revenue fell 22% to $1.18 billion, and earnings before interest and taxes in the region dropped 34%. Converse sales slid 28%. Nike's own direct channel declined 8%, with digital down 13%. Hill acknowledged "more work to do in NIKE Sportswear, Jordan Brand and Greater China," and said the company had been oversupplying retro Jordan product.
Dave Denton, who walked analysts through the numbers, called the quarter "consistent with our expectations," and indicated that earnings before interest and taxes would fall faster than revenue this year.
Two readings
Bulls will argue Nike is front-loading a deliberate clean-up, cutting supply and resetting China before a new financial framework at its Nov. 16-17 investor day. Bears will see a turnaround that has slipped again, with profit falling faster than sales.
What to watch: The investor day. Management deferred questions about returning to revenue growth in fiscal 2028 until November, which makes that event the moment the reset either earns credibility or extends.