Core Viewpoint - Nike is undergoing a transformation focused on specific sports categories like running and basketball, showing early signs of success with better-than-expected financial results for Q1 FY2026 [1] Financial Performance - Nike's Q1 FY2026 revenue was $11.7 billion, a 1% decrease on a currency-neutral basis, but above market expectations of $11 billion; diluted EPS was $0.49, also exceeding forecasts [1] - Direct-to-consumer revenue was $4.5 billion, down 5% on a currency-neutral basis; wholesale revenue was $6.8 billion, up 5% on a currency-neutral basis [1] - The company expects a single-digit percentage decline in revenue for the current quarter, in line with expectations [1] Business Strategy - CEO Elliott Hill is focused on restructuring Nike, implementing measures such as clearing old inventory, reorganizing the company structure, and changing several senior management positions [1] - The previous management's aggressive reduction of long-term wholesale partnerships and overemphasis on casual footwear led to prolonged sales declines [1] - The transformation plan aims to refocus product development and marketing on sports and rebuild relationships with retailers [1] Product Development and Market Response - Nike's running business is recovering, with sales in the running category increasing over 20% due to redesigned series like Vomero, Structure, and Pegasus [2] - Nike has returned to Amazon for the first time in six years, and its athletic shoes are again featured prominently at Foot Locker stores [2] Challenges and Market Conditions - Hill acknowledged that progress will not be entirely linear and emphasized the need for further proof of success [3] - U.S. tariffs and concerns over consumer discretionary spending are putting pressure on the transformation plan, with tariffs expected to increase costs by $1.5 billion, up from a previous estimate of $1 billion [3] - Sales in the Greater China region remain weak, with the company facing "structural challenges" and focusing on restructuring its product line for specific sports in China [3] Organizational Changes - Hill is adjusting the company structure at Nike's headquarters in Beaverton, Oregon, with a recent layoff of less than 1% of employees affecting various departments [4] - Nike's women's business has made significant progress with the launch of the new brand NikeSkims in collaboration with Kim Kardashian's lingerie brand, which received a strong consumer response [4] Market Outlook - Neil Saunders from GlobalData noted that Nike's improved performance is largely due to closer collaboration with retail partners, but emphasized that there is still much work to be done to optimize sales and weaken competitors' retail relationships [4] - Following the news, Nike's stock rose nearly 4% in after-hours trading [4]

Group 1: Market Performance - Three of the four top market indexes reached new all-time closing highs, driven by enthusiasm for AI, with NVIDIA achieving a market capitalization of $4.5 trillion [1] - The Dow increased by 81 points, the S&P 500 by 27 points, the Nasdaq by 68 points, and the Russell 2000 gained 1.6 points [1] Group 2: NIKE's Q1 Earnings - NIKE reported fiscal Q1 earnings of 49 cents per share, exceeding expectations of 27 cents, although down from 70 cents per share a year ago [2] - Revenues grew by 1% year-over-year to $11.7 billion, contrasting with an expected contraction of nearly 5% for the quarter [2] - The North American market saw a revenue growth of 4%, outperforming projections, while Mainland China grew by 9% [3] Group 3: Economic Indicators - The Job Openings and Labor Turnover Survey (JOLTS) for August reported 7.23 million job openings, surpassing the expected 7.1 million [4] - The Leisure & Hospitality sector had the highest number of open jobs at 97,000, while Construction saw a decrease of 115,000 job openings [5] - Consumer Confidence for September was reported at 94.2, below the expected 96.0, indicating potential recessionary expectations [9]

Core Insights - Nike reported $11.72 billion in revenue for the quarter ended August 2025, marking a year-over-year increase of 1.1% and a surprise of +6.49% over the Zacks Consensus Estimate of $11.01 billion [1] - The earnings per share (EPS) for the same period was $0.49, down from $0.70 a year ago, with an EPS surprise of +81.48% compared to the consensus estimate of $0.27 [1] Revenue Performance - North America revenue reached $5.02 billion, exceeding the average estimate of $4.63 billion, representing a +4% year-over-year change [4] - Asia Pacific & Latin America revenue was $1.49 billion, above the average estimate of $1.42 billion, with a +1.9% year-over-year change [4] - Europe, Middle East and Africa revenue totaled $3.33 billion, surpassing the average estimate of $3.1 billion, reflecting a +6% year-over-year change [4] - Greater China revenue was $1.51 billion, slightly above the average estimate of $1.42 billion, but showed a decline of -9.2% year-over-year [4] - Total Nike Brand revenue was $11.36 billion, exceeding the average estimate of $10.6 billion, with a +2.3% year-over-year change [4] Segment Performance - Equipment revenue in North America was $327 million, surpassing the average estimate of $288.28 million, with a +15.6% year-over-year change [4] - Converse revenue was $366 million, below the average estimate of $452.28 million, reflecting a -27% year-over-year change [4] - Global Brand Divisions revenue was $9 million, compared to the average estimate of $13.4 million, showing a -35.7% year-over-year change [4] - Corporate revenue reported at -$8 million, better than the average estimate of -$22.02 million, indicating a -65.2% year-over-year change [4] - Footwear revenue was $7.41 billion, exceeding the average estimate of $7.02 billion, with a -0.7% year-over-year change [4] - Equipment revenue was $630 million, above the average estimate of $605.02 million, reflecting a +4.5% year-over-year change [4] - Apparel revenue reached $3.31 billion, surpassing the average estimate of $2.95 billion, with a +9.3% year-over-year change [4]

Group 1 - The tariff deal with the administration makes Fizer an attractive investment opportunity [1] - There is a suggestion to invest in the pharmaceutical space through the PPH ETF, which provides exposure to multiple companies [1] - Instacart is being considered as a potential investment, indicating interest in the grocery delivery sector [1] Group 2 - The presence of a notable Wall Street analyst suggests a focus on high-profile investment insights [2] - The mention of sports affiliations may indicate a cultural connection or personal branding within the investment community [2]

Core Viewpoint - Nike reported quarterly earnings of $0.49 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, but down from $0.7 per share a year ago, indicating an earnings surprise of +81.48% [1] - The company has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - Nike's revenues for the quarter ended August 2025 were $11.72 billion, surpassing the Zacks Consensus Estimate by 6.49%, compared to $11.59 billion in the same quarter last year [2] - The current consensus EPS estimate for the upcoming quarter is $0.51 on revenues of $11.97 billion, and for the current fiscal year, it is $1.67 on revenues of $45.78 billion [7] Market Performance - Nike shares have declined approximately 8.1% since the beginning of the year, while the S&P 500 has gained 13.3% [3] - The company's Zacks Rank is currently 4 (Sell), indicating expected underperformance in the near future [6] Industry Outlook - The Shoes and Retail Apparel industry, to which Nike belongs, is currently ranked in the bottom 26% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Nike's stock performance [5]

Core Insights - The earnings release from Nike shows some positive signs, but the valuation remains a concern for investors [1][2] - Year-on-year revenue growth of only 1% is viewed as insufficient to justify the current trading multiples, which are around 30 times 2027 earnings [2][3] - There is potential for margin expansion, with current margins at 7% compared to a peak of 13%, but a return to peak levels is not expected [2] Financial Performance - The latest quarter's performance is considered better than the previous quarter, with inventory down a couple of percent, which may help improve margins [5] - Despite the modest revenue growth, there is an expectation that the stock should increase from its current levels [6] Market Sentiment - The stock's performance has been disappointing, especially given the recent history of significant price fluctuations [4] - The overall sentiment suggests that while there are improvements, the stock has not bounced back as much as anticipated following the earnings release [4][5]

U Mike Co, your thoughts on this Nike turnaround enough from the quarter to believe that it is intact. Uh, I think these are all positives. Um, you know, I would say this, you know, it's still the valuation is a little hard for me to get around.I would like to see something better than 1% year-on-year growth to make this one look competitive when you consider that it's trading what 30 times 2027 numbers right now. And certainly it's not a grower on the top line yet. Um, so there is room for margin expansion ...

Financial Data and Key Metrics Changes - For Q1 fiscal 2026, revenues increased by 1% on a reported basis but decreased by 1% on a currency-neutral basis [21] - Gross margins declined by 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [22] - Earnings per share were reported at $0.49 [22] - Inventory decreased by 2% compared to the prior year, indicating progress towards a healthier marketplace [23] Business Line Data and Key Metrics Changes - Nike Direct revenue declined by 5%, with Nike Digital down 12% and Nike stores down 1%, while wholesale grew by 5% [22] - In North America, revenue grew by 4%, with running, training, and basketball each delivering double-digit growth [23] - Sportswear showed growth but faced a 30% decline in classic footwear franchises [24] Market Data and Key Metrics Changes - Greater China experienced a revenue decline of 10%, with Nike Direct down 12% and Nike Digital down 27% [26] - EMEA revenue grew by 1%, with Nike Direct down 6% and Nike Digital down 13% [25] - APLA revenue grew by 1%, with Nike Direct down 6% and Nike Digital down 8% [27] Company Strategy and Development Direction - The company is focusing on a "sport offense" strategy to align its brands (Nike, Jordan, Converse) into more nimble teams by sport, enhancing consumer insights and innovation [6][9] - The strategy aims to maximize the portfolio across various sports and retail channels, leveraging distinct brand identities [7][8] - The company is committed to improving its position in Greater China and enhancing the digital marketplace while reducing reliance on classic franchises [18][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the cautious consumer environment and tariff uncertainties but expressed confidence in the win-now actions to drive recovery [19][30] - The company expects Q2 revenues to decline by low single digits, with gross margins down approximately 300 to 375 basis points due to new tariffs [31] - There is an emphasis on long-term growth potential, particularly in North America, while Greater China is expected to face challenges [32][34] Other Important Information - The company has activated 12 sport takeover moments in the past 10 months, connecting athlete performances to commercial assortments [14] - New partnerships, such as with Skims, are aimed at expanding product offerings and reaching new consumer segments [12][11] - The company is investing in Nike ACG to address outdoor activity opportunities, launching new high-performance products [11] Q&A Session Summary Question: Insights on the spring order book and margin recovery - Management highlighted that the spring order book is positive, reflecting growth in North America and a commitment to returning to double-digit margins over time [40][45] - The focus is on reigniting organic growth and improving the full-price mix to achieve margin recovery [46][47] Question: Update on September trading and consumer demand - Management noted that Q1 performance was not influenced by pull-forwards, and they are closely monitoring consumer signals [50][53] - The company expects significant headwinds in Q2 due to reduced promotional activity and a shift in the Dunk franchise [54] Question: Strategies for Greater China and digital business turnaround - Management emphasized the long-term opportunity in China, focusing on innovative products and local athlete activations to drive growth [69][70] - Investments have been made to clean up inventory, but profitability will depend on improved sell-through rates [72]

Financial Data and Key Metrics Changes - Revenues for the quarter were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [21] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [22] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12% and Nike stores down 1% [21] - Wholesale grew 5%, indicating a positive trend in that segment [21] - The running business grew over 20% this quarter, showcasing strong performance in that category [9] - Sportswear continued to decline, with a 30% drop in classic footwear franchises [23][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [22] - Greater China revenue declined 10%, with Nike Digital down 27% and Nike stores down 4% [25] - EMEA revenue grew 1%, with Nike Digital down 13% and Nike stores up 1% [24] - APLA revenue grew 1%, with Nike Digital down 8% and Nike stores down 5% [26] Company Strategy and Development Direction - The company is focusing on the "Sport Offense" strategy, which aims to align teams by sport for better consumer insights and innovation [6] - There is a commitment to improving the sportswear segment and addressing challenges in Greater China and Nike Direct [15][17] - The company is investing in innovative products and emotional storytelling to connect with consumers [19] - The goal is to serve consumers across multiple channels, including specialty sporting goods and Nike Direct [63] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the Win Now actions and the potential for growth, particularly in North America [19] - The company expects Q2 revenues to be down low single digits, reflecting ongoing challenges [30] - Management remains focused on long-term health and profitability despite short-term pressures [34] Other Important Information - The company is facing a significant cost headwind from new tariffs, estimated at approximately $1.5 billion annually [28] - The strategic decision to reduce reliance on classic franchises and pull back on promotions is aimed at long-term brand health [18] - The company is actively working on refreshing retail environments and improving consumer experiences in Greater China [70] Q&A Session Summary Question: Can you help us think about the spring order book in the context of the holiday book? - Management noted that the spring order book is positive and reflects growth across North America, EMEA, and APLA, offsetting headwinds in Greater China [39][44] Question: How is the current marketplace in September trading? - Management indicated that the environment is dynamic, with good sell-throughs for recent product launches, but they are closely monitoring consumer behavior [49][51] Question: Can you elaborate on the early wins in North America and running? - Management highlighted a 20% growth in running and positive momentum in North America, attributing success to the Win Now actions and the Sport Offense strategy [57][59] Question: How much of the pressure in Nike Digital is due to reduced promotions? - Management confirmed that the organic traffic decline is primarily due to strategic repositioning and reduced promotional activity, with a focus on building momentum with wholesale partners [63][66] Question: What strategies are being used to turn the digital business in China? - Management emphasized leading with sport, innovative products, and local athlete activations to improve the digital marketplace, while also focusing on store refreshes [68][70]

Financial Data and Key Metrics Changes - Revenues for Q1 2026 were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [22] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [23] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12%, while wholesale grew 5% [21] - The running business grew over 20% this quarter, showcasing strong consumer response to new innovations [10] - Sportswear business continues to decline, with a 30% drop in classic footwear franchises [24][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [23] - Greater China revenue declined 10%, with Nike Digital down 27% [26] - EMEA revenue grew 1%, with Nike Digital down 13% [25] Company Strategy and Development Direction - The company is focusing on a "sport offense" strategy to align its brands (Nike, Jordan, Converse) into more nimble teams by sport [6] - There is a commitment to improving the marketplace through innovative product offerings and emotional storytelling [19] - The company aims to enhance its digital presence while reducing reliance on classic franchises [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the win-now actions and the potential for growth in North America, despite challenges in Greater China [34] - The company expects Q2 revenues to be down low single digits, with gross margins declining due to new tariffs [32] Other Important Information - The company has activated 12 sport takeover moments in the past 10 months to connect athlete performances with commercial assortments [14] - New partnerships, such as with Skims, are aimed at expanding product offerings and reaching new consumers [12] Q&A Session Summary Question: Insights on the spring order book and holiday book context - Management noted that the spring order book is positive, reflecting growth in North America and EMEA, offsetting headwinds in Greater China [41][46] Question: Update on September trading and consumer demand - Management confirmed that Q1 performance was not influenced by pull forwards, with wholesale growth contributing to the results [51][54] Question: Early wins in North America and running growth - The company highlighted a 20% growth in running and positive signals from wholesale partners as indicators of success [58][59] Question: Traffic headwinds in Nike Digital - Management acknowledged that the decline in organic traffic is primarily due to strategic reductions in promotions and repositioning efforts [63][64] Question: Strategies for Greater China and store refresh costs - The company is focused on innovative products and local athlete activations to drive growth in China, with ongoing investments in the marketplace [66][69]