Quarter results and where the misses hit
Nike beat profit expectations with earnings of 48 cents per share versus 43 cents projected by LSEG's consensus, while sales of $11.21 billion came in a bit light versus $11.32 billion expected. Revenue fell 4% year over year. Net income was $712 million, a 2% dip from $727 million in the prior-year period. Gross margin reached 42.8%, slightly ahead of the 42.4% analysts modeled.
Regions and categories under pressure
North America revenue landed at $5.13 billion, edging past the $5.11 billion StreetAccount estimate. The bigger problem was Greater China, where revenue dropped 26%, a key reason Nike brand sales softened. CEO Elliott Hill said the company is "moving with urgency" to improve results in the region.
Sportswear was a major swing factor. Hill said the category accounted for slightly less than half of the quarter's revenue and dropped by a low double-digit percentage.
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Inside the Pace plan
Nike outlined Pace, a strategy to position the company for long-term growth. It centers on upgrading the supply chain, reconfiguring the business into three regions - the Americas; Asia Pacific and Greater China; and Europe, the Middle East and Africa - adding a new campus in India, and overhauling how the company works and staffs. The strategy is expected to deliver about $2.5 billion in savings by fiscal 2031, and will cut into fiscal 2027 EPS by 15 cents due to restructuring charges.
Layoffs are expected to begin in 2027. Nike did not say how many roles could be cut. The cuts mark the third round of layoffs announced this year. Hill told analysts, "We expect Pace to streamline decision making, so we can capture demand faster and improve productivity, while also creating greater capacity to invest in what has always set Nike apart: serving athletes, creating industry-leading innovation and building the world's strongest sports brands."
The consumer backdrop and what it means for you
Nike said it is in the midst of a broader turnaround, tackling different parts of the business based on priority, while shoppers deal with pressure from geopolitics and higher inflation. Shares have fallen more than 40% this year. The company expects adjusted EPS of $1.15 to $1.35 and projects fiscal 2027 revenue will decline by a high single digit percentage. For everyday investors, the takeaway is simple: when a leader leans on cost cuts and structure changes, the real test is whether core demand rebounds in key markets like China and whether sportswear gets its spark back. Watch those two lines and how quickly Pace shows up in the numbers.
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