NIKE 2026 Q1 Earnings Earnings Beat Expectations, Net Income Drops 30.8%

NIKE (NKE) reported fiscal 2026 Q1 earnings on October 1, 2025, beating revenue expectations but missing on guidance for future performance. While the company outperformed Wall Street’s forecasts with a 1.1% revenue increase, it signaled ongoing challenges ahead, including expected sales declines in the current quarter and continued pressure from tariffs and inventory adjustments.

Revenue

NIKE's total revenue increased by 1.1% to $11.72 billion in Q1 2026, surpassing the $11.0 billion expected by analysts. The growth was driven by the Footwear segment, which contributed $7.41 billion in revenue. Apparel added $3.31 billion, while Equipment generated $630 million. The Global Brand Divisions and Corporate segments reported minimal revenue at $9 million and a negative $8 million, respectively. Converse contributed $366 million to the overall revenue. The Total Nike Brand segment accounted for $11.36 billion in revenue.

Earnings/Net Income

NIKE’s earnings per share (EPS) declined by 30.0% to $0.49 in Q1 2026, compared to $0.70 in the same period in 2025. The company’s net income also fell to $727 million, a 30.8% decline from $1.05 billion a year earlier. While the earnings drop signals short-term challenges, it is important to note that the company has maintained profitability for over 20 years in the same quarter, highlighting its long-term resilience and operational stability.

Price Action

NIKE’s stock price edged down 0.20% on the latest trading day. Over the past week, however, the stock gained 4.18%, showing some short-term investor optimism. On a monthly basis, the stock fell 4.10%, reflecting continued volatility amid the earnings report.

Post-Earnings Price Action Review

CEO Elliott Hill emphasized positive developments in key areas such as Running, North America, and wholesale. He highlighted that the Running segment grew over 20% in the quarter, driven by innovation and market alignment. The company's "Sport Offense" reorganization, which aligns teams by sport, is designed to improve athlete and consumer engagement and drive growth. However, challenges remain in Sportswear, Greater China, and NIKE Direct, where organic traffic is slowing. Hill remained confident in the company's long-term direction, stating that the team is unified under the Sport Offense and has a clear path to success, though he acknowledged the journey is only beginning.

CEO Commentary

Elliott Hill underscored progress in three core areas: Running, wholesale, and North America. Running saw over 20% growth, while North America revenue increased by 4% to $5.02 billion, outperforming analyst expectations. Wholesale revenue rose 7% to $6.8 billion. However, challenges persist in China, where sales dropped 9%, and in Converse, where revenue fell by 27%. The direct-to-consumer segment also declined by 4% to $4.5 billion, as the company continues to clear old inventory and manage seasonal demand.

Guidance

For Q2 2026, Nike expects revenue to decline by low single digits, with a gross margin drop of 300 to 375 basis points, including a 175-basis-point headwind from tariffs. SG&A costs are expected to rise by high single digits, and Nike Direct is unlikely to return to growth in fiscal 2026. CFO Matt Friend cautioned that progress will not be linear, as different parts of the business recover at varying rates. The company is focused on inventory reduction, innovation, and structural realignment to drive future growth.

Additional News

Nike has been actively reorganizing its corporate structure to align teams by sport, a shift from previous segmentations by gender or age. This restructuring, which began in late August, involves 8,000 employees and includes workforce reductions of approximately 1%. The new structure is expected to improve coordination between Nike, Jordan, and Converse, with the goal of creating more focused, sport-specific teams. The move aligns with the company’s broader strategy to enhance innovation and market relevance, particularly in key sports markets. Additionally, Nike has launched a redesigned retail concept, the "House of Innovation" in New York, which segments products by sport and has driven double-digit revenue growth. A partnership with Kim Kardashian’s Skims brand is also part of Nike’s broader effort to expand its consumer base, particularly among women.