Nike Q1 beat on EPS but guidance hits shares

Nike posts mixed fiscal Q1 results

Nike (NKE) reported fiscal first-quarter revenue of $11.21 billion, a decline of roughly 4% from the same period a year earlier and a slight miss versus consensus expectations. Despite the softer top line, the company delivered GAAP earnings per share of $0.48, ahead of estimates of about $0.44. The results highlight a quarter in which profitability metrics improved even as sales momentum weakened.

Gross margin improved to about 42.8%, expanding by roughly 60 basis points year over year. This margin expansion indicates some progress on costs and pricing, contributing to the earnings beat. However, the improvement in profitability did not fully offset investor concern about slower revenue growth and regional softness.

Regional and channel performance pressures

A key drag on the quarter was Greater China, where revenue fell 22% year over year to about $1.18 billion. This decline underscored ongoing demand challenges and competitive pressures in one of Nike’s (NKE) historically important growth markets. The weakness in China weighed on overall company revenue and contributed to the shortfall versus expectations.

In addition to regional pressures, Nike’s direct and digital channels also showed notable declines in the period. These channels have been strategic priorities, and their softness added to concerns about the underlying demand environment. Together, the China downturn and weaker direct and digital performance framed the quarter as one of mixed progress, with cost and margin gains offset by top-line challenges.

Cautious fiscal 2027 outlook

Looking ahead, Nike issued conservative long-term guidance that emphasized caution. The company said it expects fiscal 2027 revenue to decline by a high-single-digit percentage. This outlook points to an expectation of continued sales pressure rather than a quick return to growth over the guidance horizon.

Nike also guided for adjusted EPS in fiscal 2027 to be in the range of $1.15 to $1.35. While the current quarter’s EPS beat reflected near-term margin improvement, the longer-term guidance suggested a more constrained earnings trajectory. The combination of declining revenue expectations and relatively modest adjusted EPS targets signaled that management sees ongoing headwinds.

Market reaction to results and guidance

Investors focused less on the quarterly earnings beat and more on the soft revenue and cautious outlook. Following the release of results and guidance, Nike shares fell by roughly 5% in after-hours trading. The move reflected concern about the sustainability of earnings and the impact of weakness in China and key sales channels.

The mixed first-quarter performance, with improved margins but declining sales, set a challenging backdrop for the company. While cost controls and pricing supported profitability, the guidance for a high-single-digit revenue decline by fiscal 2027 underscored that demand and competitive issues may persist. The market reaction highlighted the priority investors are placing on Nike’s ability to stabilize and grow its top line over the coming years.