Analyst Targets
- Bank of America Securities – Downgrade to Underperform, target cut to $30 (from $47)
- Evercore ISI – In Line, target cut to $34 (from $46)
- Oppenheimer – Outperform, target cut to $52 (from $60)
- Barclays – Overweight, target cut to $48 (from $52)
- BTIG – Buy, target maintained at $55
What Happened
Nike reported Q1 FY2027 after the bell on October 1. Revenue came in at $11.2 billion, down 4% year over year and below Wall Street expectations. EPS of $0.48 beat the $0.44 consensus. Gross margin expanded 60 basis points to 42.8%, primarily driven by lower warehousing and logistics costs.
The quarter was not the problem. The guidance was.
For the full fiscal year, Nike now expects revenue to decline by a high-single-digit percentage, compared with analyst models that had been less negative. Adjusted EPS is guided to $1.15-$1.35, versus prior Street expectations closer to the high-$1 range. Shares fell about 9% after hours to roughly $32.
Company Profile
Nike is the world’s largest sportswear company by revenue, operating across footwear, apparel, and equipment. Its business reaches consumers through Nike Direct (digital and owned stores) and a wholesale channel serving major retailers globally. CEO Elliott Hill, who became president and CEO in October 2024, has been pushing a performance-product-led shift called the Sport Offense, emphasizing priority sports while taking actions to reposition Nike Sportswear, Jordan Brand, and Greater China.
The Numbers
- Revenue: $11.2B vs. below expectations, down 4% reported / 5% currency-neutral
- EPS: $0.48 reported vs. $0.44 expected; net income $0.7B, down 2%
- Gross margin: 42.8%, up 60 bps year over year
- Greater China: $1.18B, down 22% reported / 26% currency-neutral; EBIT fell 34% to $248M
- North America: Up 2%
- EMEA: Down 5%; Asia Pacific & Latin America down 2%
- FY2027 revenue guide: High-single-digit decline
- FY2027 adjusted EPS guide: $1.15-$1.35, excluding ~$0.15 of Pace restructuring expenses
Why the Stock Moved
Greater China accounted for a disproportionate share of the year-over-year revenue decline in Q1, despite representing about a tenth of quarterly revenue. That arithmetic matters: a region this size should not be driving the bulk of total company erosion. On the earnings call, Hill said, “We have more work to do in NIKE Sportswear, Jordan Brand and Greater China,” and management indicated the reset in those businesses will take time.
The guidance reset is the real blow. Moving to a full-year high-single-digit decline implies the three remaining quarters will deteriorate meaningfully from the pace already reported. Management also framed the performance business as improving, but not yet large enough to offset pressure in Sportswear, Jordan, and Greater China.
Macro and Industry Context
China’s domestic sportswear market has shifted decisively toward local brands over the past several years, compressing both pricing power and shelf space for foreign labels. Nike’s digital marketplace reset in the region added inventory pressure on top of the structural competitive shift. Globally, consumer discretionary spending remains uneven, and the rotation Hill is banking on requires time Nike’s income statement cannot easily afford at current revenue levels.
Forward Scenarios
Bull case: Performance product gains critical mass by FY2028, China stabilizes sooner than guided, and Pace savings flow through faster than modeled. Shares re-rate toward $44-$48, reflecting a recovery earnings multiple on normalized EPS.
Base case: Guidance proves accurate. Revenue contracts high single digits in FY2027, China remains a drag into FY2028, and the stock trades in the $30-$36 range as analysts rebase estimates around the low end of EPS guidance.
Bear case: China deteriorates beyond what management has guided, analyst estimate cuts accelerate, and questions emerge around the dividend. BofA’s $30 target becomes the gravitational floor.
Technical Overlay
NKE traded around $32 after hours, well below its 200-day moving average and below its prior 52-week low. The after-hours level establishes $32 as the new area of interest; any failure to recover it on elevated volume would confirm the trend break. Near-term resistance sits at $35-$36, the pre-report close.
What Investors Should Watch
- Q2 China revenue trajectory: management indicated pressure is likely to persist
- Pace headcount details: charges are quantified, job cuts are not yet
- Analyst estimate revisions over the next two weeks as sell-side models reset
- Performance portfolio share of total revenue: the pace of shift determines when the math turns positive
Bottom Line
Nike beat on profit and margin, which is real operational progress. But the guidance cut overwhelmed those gains in a single line. The debate is no longer whether the turnaround is working at the product level, it is. The question is whether the China reset extends long enough to prevent the income statement from recovering before investor patience runs out. At roughly $32 after hours, the market is saying it needs to see China stabilize, not just hear that it will.
