Nike (NKE) saw both revenue and net profit decline in the first quarter of fiscal year 2027, with continued pressure on performance in Greater China. The company simultaneously launched the Pace operating model transformation, restructuring its business into three regional markets and advancing supply chain modernization, and expects cumulative savings of approximately $2.5 billion through fiscal year 2031. Although gross margin improved, Nike provided a cautious outlook of a high-single-digit revenue decline for fiscal year 2027, and the effectiveness of the transformation still requires time to be tested.
On October 1, Nike Group announced its first quarter fiscal year 2027 results for the period ended August 31, 2026. The financial report showed that first quarter revenue reached $11.2 billion, down 4% year over year; net profit was $712 million, down 2% year over year; and diluted earnings per share were $0.48, compared with $0.49 in the same period last year.
This earnings report announced the Pace operating model transformation, aimed at further accelerating and expanding the effectiveness of the “Sport Offense” strategy. The plan includes and continues the cost adjustment plan announced by Nike in March 2026. Pace includes advancing the modernization of Nike’s global supply chain, establishing a new campus in India to enhance corporate capabilities, restructuring the business into three regional markets, namely the Americas, Asia Pacific and Greater China, and EMEA (Europe, the Middle East and Africa), as well as further streamlining the organizational structure to reduce costs. Previously, Nike Group’s business was mainly divided into four regional markets: North America, Greater China, Asia Pacific and Latin America, and EMEA.
Nike expects that through fiscal year 2031, Pace will generate cumulative savings of approximately $2.5 billion. At the same time, it is expected to incur approximately $1 billion in pre-tax charges through fiscal year 2031, mainly including employee-related costs; in addition, approximately $300 million in employee severance costs had already been recognized in fiscal year 2026. Of the above pre-tax charges, approximately $300 million is expected to be recognized in fiscal year 2027.
In terms of other indicators, Nike Group’s gross margin in the first quarter rose 60 basis points to 42.8%, mainly due to lower warehousing and logistics costs. Selling and administrative expenses fell 3% to $3.9 billion, of which operating expenses were $2.7 billion, down 6% from the same period last year, mainly due to lower wage-related expenditures and other administrative costs. Regarding the business outlook, the financial report noted that Nike Group’s revenue for fiscal year 2027 is expected to record a high-single-digit decline. Adjusted diluted earnings per share are expected to be between $1.15 and $1.35, excluding the impact of approximately $0.15 in restructuring charges related to Pace in fiscal year 2027.
