Nike shares jumped Wednesday, following a solid fiscal Q1 beat reported after Tuesday's close. The Dow Jones sports retailer is navigating turnaround efforts as well as President Donald Trump's tariffs.
Nike reported earnings of 49 cents per share, down from 70 cents last year. Revenue rose 1% to $11.7 billion.
FactSet analysts expected earnings of 27 cents per share on a 5.2% sales decline to $10.99 billion.
"While we're getting wins under our belt, we still have work ahead to get all sports, geographies, and channels on a similar path as we manage a dynamic operating environment," CEO Elliott Hill said in the release.
Nike brand revenues rose 2% to $11.4 billion, which topped estimates for $10.5 billion.
Nike Direct revenues declined 4%, driven by a 12% decrease in digital sales. Wholesale revenue climbed 7%.
Total footwear sales for the Nike brand eased 1% to $7.4 billion, while FactSet expected $7.02 billion. Apparel revenue increased 7% to $3.3 billion, which beat views for $2.9 billion.
Converse revenue tumbled 27%.
North America revenue climbed 4%, but Greater China sales fell 10%.
Gross margins decreased 320 basis points, which was slightly better than the company's forecast from Q4 for a 350 basis point to 450 basis point decline. The drop was primarily attributed to lower average selling prices from higher discounts, as well as higher tariffs.
"I'm encouraged by the momentum we generated in the quarter, but progress will not be linear as dimensions of our business recover on different timelines," CFO Matthew Friend said. "While we navigate several external headwinds, our teams are focused on executing against what we can control."
Revenue Woes, Tariff Impacts
Nike in 2024 brought on company veteran Elliott Hill as CEO to return its brand to growth and help reverse NKE's four-year downtrend. The footwear giant faces growing competition from the likes Hoka, which is owned by Deckers Outdoor, and On Holding. Nike's revenue has fallen in the past five quarters, with accelerating declines the past two quarters.
Meanwhile, tariffs are also biting into results.
CFO Matthew Friend during the Q4 earnings call said that Nike expects $1 billion in incremental costs from tariffs, which includes about a 100-basis-point hit to gross margins. The company also wants to reduce its reliance on China, which makes up about 15% of its supply chain. Nike aims to cut that down to the high single digits by next summer.
Nike topped estimates for its Q4 results in June, despite double-digit declines in North American and Greater China sales.
Analysts See These Opportunities
Goldman Sachs on Thursday said that it remains "constructive" on Nike ahead of its earnings, according to a note reported by The Fly. The sneaker giant expects fundamentals to improve sequentially. Management's reset actions have weighed on sales, but Goldman said it sees emerging green shoots in sports and strategic priorities, such as performance running and women's apparel. Goldman Sachs has a buy rating and an 85 price target on Nike stock.
Third Bridge analyst Natasha Nair in a Monday note said that Nike's path to growth hinges on cleaning up its inventory quickly above all else. Nair added that Nike has laid out a timeline to get its stock under control by the end of FY 2026, which should pave the way for a return to positive sales growth "no later" than Q1 2027.
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"Previous leadership leaned too heavily on direct-to-consumer, but the expected growth didn't materialize," Nair wrote. "The new approach is to strike a healthier balance between wholesale and direct, with strategic partnerships at the core. The return to Amazon broadens access for basics and accessories, while the tie-up with Dick's Sporting Goods strengthens Nike's reach with sports-focused shoppers."
Nair noted that tariffs remain a risk to margins, but Nike is already diversifying its sourcing away from China while introducing "surgical" price increases. Nike's running footwear category has also returned to growth, proving it can hold its own against Hoka and Saucony when the products resonate with customers.
Nair sees the women's category standing out as a major lever, adding that Nike has yet to fully capture the potential of women's basketball, volleyball and other team sports.
RBC Capital earlier this month upgraded Nike stock to outperform from sector perform, noting that it sees a "steeper revenue recovery" than most Wall Street analysts. The firm pointed to new product contributions and selling for the upcoming FIFA World Cup 2026, which RBC expects to add $1.3 billion to sales. RBC added that Nike is "taking the right steps," and is seeing improvements in its running-shoes segment. The firm believes that Nike is entering a quarterly beat and guidance raise cycle, with limited downside to shares.
RBC lifted its price target on NKE stock to 90 from 76.
Nike Stock
NKE stock popped 6.4% Wednesday, after ticking narrowly higher on Tuesday. Nike on the move punched through resistance at the stock's 200-day moving average, after spending just a few sessions below that line.
Shares have trended lower since mid-September, after rebounding from near their 2025 lows following the Q4 report.
Nike stock is now down less than 2% this year, riding a downtrend stretching back to November 2021.
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