Nike beats Q1 profit forecasts, warns of fiscal 2027 revenue decline

Entering the post-earnings session, Nike's stock traded near $36, off roughly 43% year-to-date and about 80% below its November 2021 peak of $179, a defensive starting point before the release.

The revenue outlook is the likely key factor; a projected full-year sales drop could override the earnings beat and inventory improvement for investors awaiting recovery signals.

The 100-hour moving average near $36 acts as the closest reference point; the 200-hour average around $37.40 is the first resistance a relief rally must clear. Above that, the 100-day average near $41 becomes a target, whereas a slip below $36 would leave sellers in firm control.

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Nike managed to eke out a profit that surpassed market expectations, but the full-year sales decline forecast will likely shape the narrative around CEO Elliott Hill's turnaround efforts.

• Fiscal first-quarter EPS of 48 cents exceeded the roughly 44 cents expected by analysts but came in just under the 49 cents earned a year earlier.
• Revenue of about $11.2 billion missed the near $11.3 billion forecast, and Nike Brand revenue also fell short of targets.
• Gross margin rose to 42.8% from 42.2% in the prior year.
• Inventory of roughly $7.8 billion came in below the near $8 billion analysts had projected.
• Greater China EBIT landed at about $250 million, well under the roughly $310 million estimated.
• Nike guided to a high-single-digit percentage decline in fiscal 2027 revenue and adjusted EPS in the range of $1.15 to $1.35.

The sportswear giant exceeded profit expectations for the fiscal first quarter, but revenue fell short and the company warned of a full-year sales contraction, a mixed outcome as shares trade near levels not seen since early 2014.

Nike reported EPS of 48 cents for the quarter ending in August, beating the 44-cent consensus but falling just shy of the 49 cents from the corresponding period last year.

Revenue reached about $11.2 billion, below the $11.3 billion estimate and roughly 4% lower than the year-ago figure of approximately $11.7 billion. Nike Brand revenue, which encompasses the Jordan line, stood at around $11 billion, also trailing forecasts.

There were signs of operational tightening. Gross margin increased to 42.8% from 42.2% last year, and inventory of about $7.8 billion came in under the roughly $8 billion analysts had projected. Leaner inventories help lessen reliance on heavy discounting, which has hurt profitability.

Greater China continued to be a weak area. EBIT for the region was around $250 million, significantly below the roughly $310 million expected, underscoring the challenges Nike confronts in this critical market.

The outlook will probably attract the greatest focus. The company forecast a high-single-digit percentage decline in fiscal 2027 revenue and provided adjusted EPS guidance of $1.15 to $1.35.

The earnings mark another challenge for CEO Elliott Hill, a company veteran who returned to the top role in October 2024.

Hill's turnaround plan emphasises athlete-focused performance gear and strengthening bonds with wholesale partners, shifting away from the heavy focus on direct sales under his predecessor.

In the previous quarter, wholesale revenue climbed 4% as Nike Direct sales dropped 7%.

Nike is also betting on new signature lines, particularly in women's basketball. The earnings announcement was timed with the global rollout of the Caitlin 1, the first signature shoe for WNBA star Caitlin Clark, though revenue from the launch will be recorded in the current quarter.

Rivalry for top athletes is also mounting. Kylian Mbappé ended his Nike contract in September to partner with On.

Investors will seek a clearer timeline for sales stabilisation on the conference call, along with signs of recovery in China and a view of underlying margins. This final point carries particular weight, as the prior quarter's results were bolstered by a non-recurring gain from tariff recoveries.