Nike shares slid Friday after the company reported mixed Q1 earnings and announced a restructuring plan that will lead to layoffs starting next year.
Nike Q1 highlights:
- Earnings per share: 48 cents vs. 43 cents expected
- Revenue: $11.21 billion vs. $11.32 billion expected
Nike reported net income of $712 million, down 2% from $727 million the year prior.
Revenue fell 4% to $11.21 billion.
The company provided a full-year forecast, predicting a high-single-digit revenue decline in fiscal 2027. Nike also projected adjusted earnings per share to range from $1.15 to $1.35.
CEO Elliott Hill told investors, “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, We have more work to do in NIKE Sportswear, Jordan Brand and Greater China, and we’re taking deliberate actions to strengthen those businesses the right way for the long-term.”
“We delivered first quarter results consistent with our expectations, supported by improved gross margin and disciplined cost management,” said Dave Denton, Executive Vice President and Chief Financial Officer, NIKE, Inc. “As we move forward, we remain focused on strengthening the health of our product portfolio, improving productivity across the enterprise and allocating resources with discipline to support long-term shareholder value.”
Hill said on a call with analysts that the company is “moving with urgency” to improve its business in the region.
Its North America revenue came in at $5.13 billion, just above estimates of $5.11 billion. “Despite that progress, our Nike performance business is not yet large enough to offset the pressure we’re seeing in Nike Sportswear, Jordan Brand, and Greater China,” Hill told analysts. “We’re taking deliberate actions to strengthen those businesses, but realizing the full benefit of those efforts will take time.”
Nike’s sportswear segment, representing just under half of the quarter’s revenue, declined by a low-double digit percentage, according to Hill.
″Overall, there’s a lack of energy in the lifestyle space right now, which is impacting traffic,” he said. “Yes, the consumer is cautious, but as the leader in the industry, it’s on us to bring more creativity to sportswear.”
The sneaker giant also revealed a restructuring plan aimed at ‘positioning Nike for long-term growth.’ This marks the third round of layoffs Nike has announced this year.
Nike shares fell 1% Friday following the announcement.
By CEO NA Editorial Staff
