Nike (NYSE: NKE) posts lower sales and unveils Pace to cut costs

What happened

Nike, Inc. (NYSE: NKE) said first-quarter revenue fell 4 percent to $11.2 billion for the period ended August 31, 2026. Net income was $712 million and diluted earnings per share was $0.48. Gross margin rose 60 basis points to 42.8 percent. Selling and administrative expense fell 3 percent to $3.9 billion, and operating overhead expense fell 6 percent to $2.7 billion.

Nike Brand revenue fell 4 percent to $11.0 billion. Nike Direct revenue fell 8 percent to $4.1 billion as Nike Brand Digital fell 13 percent and Nike-owned stores fell 5 percent. Greater China revenue fell 22 percent to $1.2 billion, while North America revenue rose 2 percent to $5.1 billion.

The company returned about $610 million to shareholders through dividends, up 3 percent from the prior year. Nike also announced Pace, a multi-year operating model transformation that builds on the March 2026 cost realignment plan and is meant to improve productivity, organizational effectiveness and the cost structure.

Key numbers

Metric	Latest	Change	Source
First-quarter revenues	$11.2 billion	from $11.7 billion, -4%	Nike, Inc. fiscal 2027 first-quarter earnings release
Gross margin	42.8%	from 42.2%, +60 basis points	Nike, Inc. fiscal 2027 first-quarter earnings release
Net income	$712 million	from $727 million, -2%	Nike, Inc. fiscal 2027 first-quarter earnings release
Diluted earnings per share	$0.48	from $0.49, -2%	Nike, Inc. fiscal 2027 first-quarter earnings release
Selling and administrative expense	$3.9 billion	from $4.0 billion, -3%	Nike, Inc. fiscal 2027 first-quarter earnings release
Pace cumulative savings	approximately $2.5 billion		Nike, Inc. fiscal 2027 first-quarter earnings release

Read more: Nike (NKE) stock analysis and investment case

Why it matters

OptimistFi's case is that Nike converts an iconic brand, product innovation and scale distribution into repeatable pricing power and cash generation if the mix holds up. This filing is mixed because lower sales in Nike Direct, Greater China and Converse still pressure demand, but gross margin improved and operating overhead declined 6 percent.

Pace's planned $2.5 billion of cumulative savings is 2.5 times the expected $1.0 billion of pre-tax charges. Nike also returned about $610 million to shareholders through dividends in the quarter. Inventories were $7.8 billion, down 3 percent, and cash and equivalents and short-term investments were $8.4 billion, down about $0.2 billion.

The effective tax rate was 22.7 percent compared with 21.1 percent a year ago, mainly because of foreign tax audit settlements recognized in the current year. The company also said fiscal 2027 revenue is expected to decline high-single digits, and Pace's savings, charges and cash expenditures are estimates that may differ materially.

Related: Why Is NIKE, Inc. (NYSE: NKE) Stock Down 43% This Year?

What's next

Nike management will host a conference call at approximately 2 00 p.m. PT on October 1, 2026, to review fiscal first-quarter results. That call is the next dated update on Pace and the fiscal 2027 outlook. A call that restates the high-single-digit revenue decline guide and the Pace savings timetable through fiscal 2031 would support the case, while weaker Nike Direct or Greater China trends would weaken it.

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