Nike reports mixed Q1 results, forecasts revenue decline and announces restructuring plan with layoffs
Quick Look
- Nike posted mixed fiscal first-quarter results, beating earnings estimates but missing revenue targets, with China sales down 26%.
- The company forecasted a high-single-digit revenue decline for fiscal 2027 and announced a restructuring plan expected to begin layoffs in 2027, aiming for $2.5 billion in savings by 2031.
- Shares fell roughly 3% in extended trading.
AI-generated summary
Why It Matters
Nike reported fiscal first-quarter results that exceeded earnings expectations but fell short on revenue, particularly due to a 26% decline in China sales. The company provided a full-year outlook for fiscal 2027 and announced a restructuring plan.
Nike on Thursday posted a mixed fiscal first quarter and announced a restructuring plan that will lead to layoffs starting next year.
The company also offered a full-year outlook, saying it expects revenues to decline by a high-single digit percentage in fiscal 2027.
Shares of Nike fell roughly 3% in extended trading Thursday.
Here's what the company reported for the period compared to what analysts expected, according to consensus estimates from LSEG:
Earnings per share: 48 cents vs. 43 cents expected
Revenue: $11.21 billion vs. $11.32 billion expected
Nike reported net income of $712 million, down 2% from $727 million the year prior.
Revenue fell 4% to $11.21 billion. The retailer said Nike brand revenues took a hit largely due to sustained declines in the China business. Revenue in the market dropped 26%.
Its North America revenue came in at $5.13 billion, just above estimates of $5.11 billion, according to StreetAccount. Nike also reported gross margin of 42.8% compared to estimates of 42.4%.
Nike also announced a change to its operating model to "position Nike for long-term growth." The strategy is expected to result in layoffs beginning in 2027, though the company did not provide any further details.
"This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty. I don't take that lightly," CEO Elliott Hill wrote in a letter to the company.
The company said it plans to focus on its supply chain modernization, organizing into three geographies, building a new campus in India and changing its work and workforce. The strategy is expected to deliver approximately $2.5 billion in savings through fiscal 2031.
It'll also result in a 15-cent restructuring expense to fiscal 2027 earnings per share, the company added.
What to Watch
AI outlook — possibilities, not facts
Nike will implement layoffs beginning in 2027 as part of its restructuring plan
Very likely · Within years
Nike will achieve approximately $2.5 billion in savings through fiscal 2031 from its restructuring efforts
Likely · Within years
Open Questions
- What specific roles will be affected by the layoffs?
- How will the restructuring impact Nike's operations in China and other regions?
- What are the details of the new campus in India and its expected timeline?
