NIKE Q1 Earnings & Revenues Beat Estimates, Outlines Bleak Q2 Outlook

Core Insights - NIKE Inc. reported first-quarter fiscal 2026 results with revenues of $11.72 billion, a 1% year-over-year increase, surpassing estimates, while EPS declined 30% to 49 cents, beating the consensus estimate of 27 cents [1][2][7] Revenue Performance - Revenues improved 1% year-over-year to $11.72 billion, exceeding the Zacks Consensus Estimate of $11.02 billion; on a currency-neutral basis, revenues decreased by 1% [2] - NIKE Direct revenues fell 4% to $4.5 billion, driven by a 12% drop in NIKE Brand Digital and a 1% decrease in NIKE-owned stores; wholesale revenues rose 7% year-over-year to $6.8 billion [3][7] - NIKE Brand revenues increased 2% year-over-year to $11.4 billion, with a decline in China offset by growth in North America [4] Regional Performance - North America revenues rose 4% to $5.02 billion, with wholesale sales increasing 11% year-over-year; NIKE Direct sales in the region fell 3% [5] - EMEA revenues improved 6% year-over-year to $3.3 billion, while Greater China revenues dropped 9% to $1.5 billion [8][9] - APLA revenues increased 2% year-over-year to $1.5 billion, with wholesale revenues rising 6% [10] Cost and Margin Analysis - Gross profit declined 6% year-over-year to $4.9 billion, with gross margin contracting 320 basis points to 42.2% due to increased wholesale discounts and elevated product costs [11] - Selling and administrative expenses fell 1% to $4.02 billion, with SG&A as a percentage of sales declining 60 basis points to 34.3% [12] Balance Sheet and Shareholder Returns - As of the end of the first quarter, cash and cash equivalents were $7.02 billion, down nearly 17% year-over-year; inventories totaled $8.1 billion, down 2% [14][15] - The company returned $714 million to shareholders, including $123 million in share repurchases and $591 million in dividends [15] Future Outlook - For Q2 fiscal 2026, NIKE expects low-single-digit revenue decline and a gross margin contraction of 300-375 basis points, with a significant impact from new tariffs [19][20] - Management anticipates continued momentum in the wholesale business and expects North America to lead global recovery, while Greater China may take longer to rebound [21][23]