Nike earnings beat Wall Street’s forecast in the fiscal first quarter on lower costs, not sales growth. Yet CEO Elliott Hill’s turnaround plan comes with a guided high-single-digit revenue decline for fiscal 2027.

Earnings of 48 cents a share topped the 43-cent consensus. Revenue of $11.21 billion, however, missed the $11.32 billion forecast, and net income still fell 2%.

Where Do Nike Earnings Hide the Sales Problem?

Revenue fell 4% to $11.2 billion, Nike said. Greater China and Europe, the Middle East and Africa led the drop.

Greater China revenue fell 22% to $1.18 billion, or 26% excluding currency effects. Earnings before interest and taxes in the region dropped 34% to $248 million.

Elsewhere, Nike told analysts that Sportswear, just under half of revenue, fell by a low double-digit percentage. Planned cuts to the Dunk sneaker, where revenue dropped nearly 50%, explain part of that.

Similarly, revenue at Jordan Brand, which makes up 13% of Nike’s business, slid by a mid-teens percentage.

Zachary Warring, an equity analyst at CFRA Research, expects Jordan to stabilize in coming quarters, later than CFRA expected.

“I think Jordan is an operating issue right now.” Zachary Warring, Equity Analyst at CFRA Research, speaking on Bloomberg

Can Cost Cuts Substitute for Growth at Nike?

Nike’s Pace restructuring, which builds on a March cost-cutting round, targets about $2.5 billion in total savings by fiscal 2031.

Layoffs start in 2027, CNBC reported, and mark the company’s third round of job cuts this year. The plan carries about $1 billion in pretax charges through fiscal 2031.

Cheaper warehousing and logistics lifted gross margin by 0.6 percentage point to 42.8%. In contrast, the prior quarter’s beat leaned on a one-time tariff refund.

However, Nike guided to adjusted earnings of $1.15 to $1.35 a share for the fiscal year ending in May. That figure excludes about 15 cents of Pace restructuring costs.

Warring, who keeps a buy rating, found that guidance disappointing but called Pace a good start before reading its details.

“Nike can earn north of $3 a share pretty easily if they really focus on operating efficiencies.” Zachary Warring, Equity Analyst at CFRA Research, speaking on Bloomberg

Who Captures the Sales Nike Is Losing?

Hill took over in October 2024. Warring said this quarter looked like one he would have expected two or three quarters in, not two years in.

Shares fell about 8% in after-hours trading Thursday, Investing.com reported. They had already lost roughly 40% this year, which made Nike the Dow’s worst performer by mid-September.

Shares fell sharply overnight. Image Source: Trading View

Running rivals Hoka and On are doing well in the US, Warring said. In China, however, he said Nike may have to compete on price against local brands, which would hurt margins.

Nike’s $2.5 billion savings estimate comes before any reinvestment. Its investor day in November may show how much flows back into competing with Hoka, On, and local Chinese brands.