Nike (NKE) NKE Q1 Financial Results Summary
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NIKE, Inc. (NKE) Q1 2027: Revenue Decline, Margin Improvement — Cautiously Optimistic
NIKE, Inc. (NYSE:NKE) reported its fiscal 2027 first quarter results for the period ending August 31, 2026. The company experienced a revenue decline of $0.5 billion, or -4% year-over-year, with total revenues reported at $11.2 billion. This performance reflects ongoing challenges, particularly in key markets such as Greater China and EMEA, despite some growth in North America.
Key Financial Metrics:
- Total Revenues: $11.2 billion, down $0.5 billion or -4% YoY
- Gross Margin: 42.8%, up 60 basis points from the previous year
- Selling and Administrative Expenses: $3.9 billion, down 3% YoY
- Diluted Earnings Per Share (EPS): $0.48, down from $0.49 YoY
- Net Income: $0.7 billion, down 2% YoY
Analyst Opinion
This quarter can be viewed as disappointing for shareholders, primarily due to the revenue decline. While the company managed to improve its gross margin and reduce selling and administrative expenses, the overall drop in revenue indicates ongoing headwinds in key markets. The decline in NIKE Brand revenues, particularly in Greater China, raises concerns about the company's ability to regain momentum in this critical region.
Detailed Financial Analysis
- Revenue Breakdown:
- NIKE Brand Revenues: $11.0 billion, down 4% YoY
- Wholesale Revenues: $6.8 billion, down 1% YoY
- Direct Revenues: $4.1 billion, down 8% YoY
- Converse Revenues: $263 million, down 28% YoY
- NIKE Brand Revenues: $11.0 billion, down 4% YoY
- Cost Management:
- The gross margin improvement to 42.8% was driven by lower warehousing and logistics costs, which is a positive sign for operational efficiency.
- Selling and administrative expenses decreased by 3% to $3.9 billion, indicating effective cost management strategies.
- Earnings Performance:
- Diluted EPS of $0.48 reflects a slight decrease from $0.49 in the prior year, which may not meet investor expectations given the revenue challenges.
Shareholder Returns
NIKE returned approximately $610 million to shareholders through dividends, marking a 3% increase from the prior year. This commitment to returning capital is a positive aspect for investors, even amidst the revenue decline.
Guidance and Future Outlook
Looking ahead, NIKE anticipates a challenging fiscal 2027, with revenues expected to decline in the high-single digits. The effective tax rate is projected to be in the mid-20 percent range. Importantly, the company has provided guidance for adjusted diluted EPS in the range of $1.15 to $1.35, excluding approximately $0.15 of restructuring expenses related to the new operating model transformation, Pace.
Forward Catalyst
Investors should closely monitor the implementation of the Pace operating model, which aims to deliver approximately $2.5 billion in cumulative savings through fiscal 2031. The success of this initiative, along with improvements in key markets like Greater China and the effectiveness of cost management strategies, will be critical for NIKE's performance in the upcoming quarters. Additionally, any updates on product portfolio enhancements and market repositioning efforts will be key indicators of the company's ability to rebound from this quarter's challenges.
NIKE, Inc. Condensed Consolidated Statements of Income (Unaudited)
(In millions except per share data)
Note: All amounts are in millions.
| 8/31/2026 | 8/31/2025 | Change | |
|---|---|---|---|
| Revenues | $ 11,213 | $ 11,720 | -4 % |
| Cost of sales | 6,415 | 6,777 | -5 % |
| Gross profit | 4,798 | 4,943 | -3 % |
| Gross margin | 42.8 % | 42.2 % | 60 bps |
| Demand creation expense | 1,252 | 1,188 | 5 % |
| Operating overhead expense | 2,658 | 2,828 | -6 % |
| Total selling and administrative expense | 3,910 | 4,016 | -3 % |
| % of revenues | 34.9 % | 34.3 % | 60 bps |
| Interest (income) expense, net | -14 | -18 | — |
| Other (income) expense, net | -19 | 23 | — |
| Income before income taxes | 921 | 922 | 0 % |
| Income tax expense | 209 | 195 | 7 % |
| Effective tax rate | 22.7 % | 21.1 % | 160 bps |
| NET INCOME | $ 712 | $ 727 | -2 % |
| Earnings per common share: | |||
| Basic | $ 0.48 | $ 0.49 | |
| Diluted | $ 0.48 | $ 0.49 | |
| Weighted average common shares outstanding | Basic | 1,483.6 | 1,476.6 |
| Diluted | 1,484.2 | 1,479.0 | |
| Dividend declared per common share | $ 0.410 | $ 0.400 |
NIKE, Inc. Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in millions)
Note: All amounts are in millions.
| ASSETS | 8/31/2026 | 8/31/2025 | % Change |
|---|---|---|---|
| Cash and equivalents | $ 6,903 | $ 7,024 | -2 % |
| Short-term investments | 1,465 | 1,551 | -6 % |
| Accounts receivable, net | 5,242 | 4,962 | 6 % |
| Inventories | 7,846 | 8,114 | -3 % |
| Prepaid expenses and other current assets | 2,217 | 2,247 | -1 % |
| Total current assets | 23,673 | 23,898 | -1 % |
| Property, plant and equipment, net | 4,887 | 4,861 | 1 % |
| Operating lease right-of-use assets, net | 2,947 | 2,727 | 8 % |
| Identifiable intangible assets, net | 259 | 259 | 0 % |
| Goodwill | 240 | 240 | 0 % |
| Deferred income taxes and other assets | 5,788 | 5,349 | 8 % |
| TOTAL ASSETS | $ 37,794 | $ 37,334 | 1 % |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Current portion of long-term debt | $ 2,000 | $ - | 100 % |
| Accounts payable | 3,420 | 3,772 | -9 % |
| Current portion of operating lease liabilities | 473 | 506 | -7 % |
| Accrued liabilities | 5,338 | 5,927 | -10 % |
| Income taxes payable | 178 | 706 | -75 % |
| Total current liabilities | 11,409 | 10,911 | 5 % |
| Long-term debt | 5,893 | 7,996 | -26 % |
| Operating lease liabilities | 2,706 | 2,555 | 6 % |
| Deferred income taxes and other liabilities | 2,566 | 2,404 | 7 % |
| Redeemable preferred stock | — | — | — |
| Shareholders' equity | 15,220 | 13,468 | 13 % |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 37,794 | $ 37,334 | 1 % |
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