Nike announced its Q1 2027 earnings on October 1, 2026, with the company delivering results that exceeded Wall Street expectations despite facing significant sales challenges. According to reports from MarketBeat, the company reported earnings of 48 cents per share, topping the 43-cent consensus estimate. However, revenue of $11.21 billion missed the $11.32 billion forecast, representing a 4% decline from the previous year. The earnings beat was primarily driven by lower costs rather than sales growth, as reported by Bloomberg. Quarterly profit declined 2% to $712 million, reflecting the company's ongoing operational challenges. Shares fell 8% in extended trading following the announcement, with the stock trading around $32.22 in early Friday trading, marking levels not seen in 12 years and far below its 2021 peak of about $175. Nike shares have fallen 47% this year, making it the Dow's worst performer by mid-September, and closed at $33.96 on October 5.
Retail CEO Jan Kniffen from J. Rogers Kniffen Worldwide Enterprises warns that AI shopping agents could steer shoppers away from legacy brands like Nike, as reported by CNBC. According to Kniffen, shoppers who ask for running shoes may never see Nike first, with rivals such as Hoka or On potentially winning on fit and price. However, he suggests that inertia could shield brands, because many shoppers still ask for Nike by name. Nike has not been idle in adapting to AI trends, with ConsumerGoods reporting in May that the company planned to sell inside Google's Gemini chatbot and AI Mode search from June. Despite Nike's $11.2 billion quarterly revenue scale, the company's sales fell 4% according to its latest results, with CEO Elliott Hill noting that performance products remain too small to offset losses elsewhere. Citi analysts summed up the shift, stating 'Nike is turning into a cost-cutting story.'
Greater China emerged as the most significant challenge, with revenue falling 22% to $1.2 billion, or 26% excluding currency effects. According to AFP, earnings before interest and taxes in the region dropped 34% to $248 million. CEO Elliott Hill acknowledged on Thursday that efforts to stabilize the market will take 'multiple seasons' and will weigh on profitability. The company is implementing a deliberate contraction strategy by cutting ties with thousands of online distributors beginning in January, channeling shoppers to Nike-owned digital properties. Online sales were 22% of Nike's revenue last fiscal year, with the company acknowledging significant short-term impact from this restructuring. China matters because it has been one of Nike's largest international markets and a significant contributor to profit, where the recovery has been slowest.
Sportswear, which accounts for just under half of Nike's revenue, fell by a low double-digit percentage. As reported by Bloomberg, planned cuts to the Dunk sneaker, where revenue dropped nearly 50%, explain part of this decline. Similarly, revenue at Jordan Brand, which makes up 13% of Nike's business, slid by a mid-teens percentage. CEO Elliott Hill highlighted the need to improve the performance of Nike's Sportswear and Jordan brands as the company works to regain momentum. The company is trying to return the Jordan franchise to premium growth by reducing the number and frequency of retro sneaker launches after years of oversupply and discounting. Hill admitted that a 'lack of energy in the lifestyle space' was hurting traffic, stating 'Simply put we've been oversupplying our iconic retro product, asking them to do too much.'
Nike's Pace restructuring program, which builds on a March cost-cutting round, targets about $2.5 billion in total savings by fiscal 2031. According to AFP, layoffs are set to begin in 2027, marking the company's third round of job cuts this year, with the plan carrying about $1 billion in pretax charges through fiscal 2031. CEO Elliott Hill told analysts that 'Nike must make changes to become a more agile, efficient and athlete-focused company,' with decisions about impacted roles beginning in calendar year 2027 and beyond. The company guided to adjusted earnings of $1.15 to $1.35 per share for the fiscal year ending in May, excluding about 15 cents of Pace restructuring costs. North America was the only region where revenue grew, increasing 2%, while the company warned that full-year fiscal 2027 revenue is expected to decline by a high-single-digit percentage. However, most of the savings from the overhaul will not be realized until fiscal 2029 and 2030, as reported by The Economic Times.
Shares were down about 8% at $32.22 in early trading on Friday, around their lowest level in 12 years and far behind a 2021 peak of about $175, as reported by The Economic Times. The stock had already lost roughly 40% this year, making Nike the Dow's worst performer by mid-September. Neil Saunders from GlobalData called the outlook 'shabby,' stating 'Nike's brand heat continues to fade and it isn't powerful enough to punch back against more nimble competitors.' In the US market, running rivals Hoka and On are performing well, while in China, Nike may have to compete on price against local brands, which would hurt margins. The challenges are more evident in China, once one of Nike's most important growth engines but now a problem area. Best Buy, Target, and Victoria's Secret have done well this year, while agents could widen the split between winners and losers in the retail sector.
