Nike beat on earnings, guided revenue lower for the year, and announced layoffs

Nike's fiscal first quarter, reported after Thursday's close, was better than analysts expected on the bottom line and worse than the market wanted on everything that describes the next twelve months.

Revenue for the quarter ended August 31 was $11.2 billion, down 4% as reported and down 5% on a currency-neutral basis. Diluted earnings per share were $0.48, ahead of the $0.43 consensus compiled by LSEG. Gross margin expanded 60 basis points to 42.8%, and selling and administrative expense fell 3% to $3.9 billion. On its own, that combination describes a company managing a downturn competently.

Where the revenue went

The composition is the problem. Nike Brand revenue was $11.0 billion, down 4% both as reported and currency-neutral, which the company attributed primarily to declines in Greater China and EMEA, partially offset by growth in North America.

Nike Direct — the company's own stores and apps, the centerpiece of the direct-to-consumer strategy of the past decade — fell 8% as reported and 9% currency-neutral, to $4.1 billion. Inside that, Nike Brand Digital dropped 13% and Nike-owned stores fell 5%. Wholesale, the channel Nike spent years de-emphasizing and has been rebuilding since, was comparatively steady at $6.8 billion, down 1%.

Converse remains the sharpest line in the release: revenue of $263 million, down 28% as reported and currency-neutral, with declines across every territory.

Pace, and what a restructuring means here

Alongside the numbers, Nike announced what it calls Pace, an operating-model transformation intended to scale the "Sport Offense" strategy chief executive Elliott Hill has been running since taking the job. The company said the restructuring will result in layoffs beginning in 2027.

"The Sport Offense is driving measurable progress across our performance business... 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." — Elliott Hill, president and CEO, Nike

Chief Financial Officer Dave Denton framed the quarter as in line with plan, saying results were "consistent with our expectations, supported by improved gross margin and disciplined cost management," with the focus ahead on product-portfolio health, enterprise productivity and disciplined resource allocation.

Three of the businesses Hill named — Sportswear, Jordan and Greater China — are the ones carrying the revenue decline. That is a candid read from a CEO about his own portfolio, and it is also an acknowledgement that the turn is a multi-year project rather than a quarter-to-quarter fix.

The guidance is the news

Nike told investors to expect fiscal 2027 revenue to decline by a high-single-digit percentage, with adjusted earnings per share of $1.15 to $1.35. For a company that just delivered $0.48 in a single quarter, a full-year range starting at $1.15 implies meaningful pressure across the remaining three quarters — from tariffs and input costs, from the China and EMEA weakness, and from the cost of the restructuring itself.

That is what moved the stock. Shares slipped about 3% in Thursday's extended session as the release was digested, then fell roughly 9% to 9.5% in Friday pre-market trading, quoted near $31.82 by Benzinga's pre-market tally. For context on the longer arc, Nike closed Thursday's regular session at $35.15, down 0.71% on the day, after trading above $40 a month earlier.

Reading it without the ticker

There are two defensible ways to interpret the same release, and both are visible in the numbers.

• The constructive read: gross margin is expanding, costs are coming down, wholesale has stabilized at down 1%, and North America is growing again. A company fixing its product pipeline usually fixes margin before it fixes revenue.
• The cautious read: the revenue decline is concentrated in the highest-margin, most brand-dependent parts of the business — Sportswear, Jordan, digital — and the fix now requires a formal restructuring with job cuts a year out. Digital down 13% is not a cyclical number.
• What would settle it: holiday-quarter results, where Greater China and the Sportswear reset get their first full test against a tougher comparison and against competitors that have taken shelf space in running specifically.

Nike's position in the sector matters beyond its own shareholders. It is the largest single name in athletic footwear and apparel, a bellwether for discretionary consumer spending, and one of the most China-exposed large-cap US consumer brands. A high-single-digit revenue decline guided for the full year is a statement about more than one company's product cycle.

What to watch next

Three markers from here. First, the scope of Pace: Nike has described the model change and the timing of layoffs, but not the cost or the headcount, and both will show up in coming filings. Second, Greater China's trajectory, which has now been the primary drag for several consecutive quarters. Third, whether Nike Direct's digital decline flattens — the 13% drop is the clearest measure of how much of the DTC build-out needs rethinking rather than retuning.

Figures in this article are from Nike's fiscal 2027 first-quarter release of October 1, 2026, CNBC's earnings coverage and consensus from LSEG. Pre-market quotes are as of Friday, October 2, before the opening bell.