Nike Guides to a Down Year and Cuts Jobs Again as China Sales Fall 22%

NIKE, Inc. (NYSE: NKE) told investors last night that fiscal 2027 will get worse before it gets better. The company missed on fiscal first-quarter revenue, guided full-year sales to a high-single-digit decline, and launched a second restructuring program in two years — one that cuts more jobs. Accordingly, the stock trades at $32.36 in premarket, down $2.74 or 7.80% from Thursday’s $35.40 close, which puts it beneath its $35.02 52-week low. Barring a reversal at the open, Nike makes a fresh one-year low this morning.

Key Points

• Revenue fell 4% to $11.2 billion (5% currency-neutral), missing consensus near $11.33 billion. Diluted EPS came in at $0.48, and net income slipped 2% to $712 million.
• Greater China collapsed 22% to $1.2 billion — the ninth consecutive quarterly decline, and a sharp acceleration rather than a stabilization.
• Wholesale turned negative, falling 1% to $6.8 billion. That channel grew 6% in fiscal 2026 and anchored the entire strategic pivot, so its reversal matters more than the headline miss.
• Nike Direct dropped 8%, with brand digital down 13% and owned stores down 5%. Converse fell 28% to $263 million.
• North America grew 2% to $5.1 billion — the only geography in the green.
• Gross margin expanded 60 basis points to 42.8% and inventories declined 3% to $7.8 billion, so the cost discipline is working even as demand erodes.
• Fiscal 2027 guidance: revenue declines high single digits, with adjusted EPS of $1.15 to $1.35, excluding roughly $0.15 of restructuring expense.
• New program, “Pace,” targets $2.5 billion in cumulative savings through fiscal 2031 against $1.0 billion in pre-tax charges — and it eliminates roles.

What Actually Broke Inside Nike (NKE)

Strip out the noise and one line explains the quarter: wholesale stopped growing. Last year, CEO Elliott Hill rebuilt relationships with retail partners after his predecessor pushed Nike toward direct-to-consumer, and wholesale’s 6% fiscal 2026 growth served as proof the pivot worked. This quarter, however, that channel slipped 1%. Meanwhile Nike Direct fell another 8% and digital dropped 13%, so both engines now run in reverse simultaneously.

China, furthermore, deteriorated rather than bottomed. A 22% decline in a $1.2 billion quarter means the market Nike once treated as its growth story now actively subtracts from results, and nine straight quarters of contraction makes “transitory” an untenable description. Domestic competitors keep taking share while tariff pressure compounds the problem.

Nevertheless, the operational story deserves credit. Gross margin expanded despite falling volume, inventories came down 3%, and Nike holds $8.4 billion in cash and short-term investments. Consequently, this is not a liquidity problem or a margin problem. It is a demand problem.

“Pace”: A Second Restructuring in Two Years

Nike introduced Pace alongside the results, and the program reaches well beyond headcount. Specifically, it modernizes the global supply chain, establishes a campus in India, and realigns the company into three geographies. Management already recognized $0.3 billion in severance during fiscal 2026 and expects roughly another $0.3 billion in fiscal 2027.

Hill framed the program as acceleration rather than retrenchment: “The Sport Offense is driving measurable progress across our performance business, and we introduced Pace to help us accelerate and scale that momentum across NIKE.” Separately, however, he acknowledged the human cost plainly, writing that the work “will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty.”

CFO Dave Denton struck the same careful note on the quarter itself, saying Nike “delivered first quarter results consistent with our expectations, supported by improved gross margin and disciplined cost management.” Read together, both statements concede the top line while defending the execution — which is the honest position, though not a reassuring one.

What NKE Investors Should Weigh Now

One analyst already called this. On September 25, six days before the print, Bank of America’s Lorraine Hutchinson downgraded Nike from Neutral to Underperform and cut her target to $30 from $47, citing a longer-than-expected turnaround. Critically, she trimmed her fiscal 2027 EPS estimate 11% and put it 14% below consensus — and last night’s $1.15-to-$1.35 guidance suggests consensus, not Hutchinson, had the number wrong. Barclays had also cut its target to $48 ahead of the report. Expect the rest of the Street to reset through today.

The bull case now rests on narrow ground: margins expanding, inventory clean, North America positive, a balance sheet that can fund a multi-year rebuild, and a stock near one-year lows against roughly $52 billion of market value at Thursday’s close. The bear case is simpler — management just guided to a down year, and nobody has yet identified what reverses China.

Context from the past three weeks sharpens both arguments. Nike added LVMH heir Alexandre Arnault to its board on September 15, then formally exited the S&P 100 on September 21 after 18 years. Last night’s guidance confirms what the index removal implied rather than contradicting it.

What to Watch Next

First, watch the post-print analyst revisions landing today, and specifically whether anyone defends a fiscal 2027 recovery thesis after that guidance. Second, watch Pace execution — $2.5 billion of savings against $1.0 billion of charges only creates value if the top line stabilizes, because cost cuts cannot outrun a high-single-digit revenue decline indefinitely. Third, watch the next China print above all else; until that line inflects, every other improvement stays cosmetic. Finally, watch the $35.02 level that just broke, since technical support gives way before fundamentals turn.