Nike Revenue Falls 4% To $11.2 Billion As Greater China Plunges 22% — And The Company Launches A $2.5 Billion Restructuring
The company's first-quarter results and a new multi-year operating overhaul called Pace landed in the same 8-K filing Thursday.
Nike reported first-quarter revenues of $11.2 billion, down 4 percent from a year earlier, in an 8-K filed Thursday — and simultaneously unveiled a sweeping operating overhaul called Pace that it expects to deliver approximately $2.5 billion in cumulative savings through fiscal 2031. The two disclosures together define the challenge facing President and CEO Elliott Hill: the business is still shrinking while the company absorbs the cost of rebuilding it.
What The Filing Says
Net income fell 2 percent to $0.7 billion, with diluted earnings of $0.48 per share, according to the earnings release attached to the 8-K. Gross margin expanded about 60 basis points — six-tenths of a percentage point — to 42.8 percent, driven by lower warehousing and logistics costs. Selling and administrative expense fell 3 percent to $3.9 billion.
The regional picture was uneven. North America grew 2 percent to $5.13 billion. Greater China collapsed 22 percent to $1.18 billion, and earnings before interest and taxes from that region fell 34 percent year-over-year to $248 million — the steepest regional profit decline in the quarter. Converse dropped 28 percent to $263 million, with declines across all territories.
Nike Direct revenues fell 8 percent to $4.1 billion, pulled down by a 13 percent drop in digital sales through Nike's own channels and a 5 percent decline in Nike-owned stores. On the balance sheet, inventories stood at $7.8 billion, down 3 percent, while cash and short-term investments were $8.4 billion, roughly $0.2 billion lower than the prior period. The company returned approximately $610 million to shareholders through dividends in the quarter, up 3 percent from a year earlier.
The Pace Restructuring: Cost And Savings
The Pace program, approved by Nike's board and disclosed in Thursday's 8-K, includes and builds on an earlier cost realignment plan Nike announced in March 2026. Its components: modernizing the global supply chain, establishing a new campus in India, and reorganizing the company's operating model into three geographic units.
The cost is substantial. Nike expects roughly $1.0 billion in pre-tax charges through fiscal 2031 — primarily employee severance and related costs — on top of approximately $0.3 billion in severance already recognized in fiscal 2026 under the March plan. About $0.3 billion of the new charges are expected to land in fiscal 2027 alone, with the remainder spread through fiscal 2031.
Against that, the company projects approximately $2.5 billion in cumulative savings through fiscal 2031. Nike's own filing notes that figure is stated before the pre-tax charges and any future reinvestment, and that actual results may differ materially.
"The Sport Offense is driving measurable progress across our performance business, and we introduced Pace to help us accelerate and scale that momentum across NIKE," CEO Elliott Hill said in the press release. "We have more work to do in NIKE Sportswear, Jordan Brand and Greater China, and we're taking deliberate actions to strengthen those businesses the right way for the long-term."
CFO Dave Denton framed the quarter as on-plan: "We delivered first quarter results consistent with our expectations, supported by improved gross margin and disciplined cost management."
Guidance And What To Watch
For all of fiscal 2027, Nike guided for a high-single-digit revenue decline. The company projected adjusted diluted earnings per share of $1.15 to $1.35, excluding approximately $0.15 of restructuring charges tied to Pace.
Nike shares closed at $35.15 Thursday, down 0.71 percent at Thursday's close.
The next major milestone is an investor day Nike is scheduled to hold in November — its first in nine years, according to Sportico — where management is expected to lay out the longer-term roadmap for Pace and the Sport Offense strategy. Investors will also be watching whether the fiscal second-quarter results show any stabilization in Greater China and Converse, the two businesses that drove the steepest declines this quarter.
Nike's next scheduled test is the November investor day, where the company will need to show a credible path from a 4 percent revenue decline and a $1.3 billion restructuring bill to the $2.5 billion in savings Pace promises.
Sources
- 8-K Filing — NIKE, Inc. (NKE) — SEC EDGAR
- Exhibit q1fy27exhibit991er.htm — NIKE, Inc. 8-K exhibit — SEC EDGAR
- Why Wall Street Is Restless for a Nike Turnaround — sportico.com
- Can Nike’s New Slate of Race-day Super Shoes Help Deliver a Win? — wwd.com
