NIKE(US:NKE) Zhi Tong Cai Jing·2025-10-01 00:02Core 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]