Nike’s first-quarter earnings beat Wall Street expectations

Core Insights - Nike exceeded market expectations in its latest earnings report, posting fiscal Q1 2026 earnings of $0.49 per share on revenue of $11.7 billion, reflecting a 1% increase in revenue year-over-year, despite a 31% decline in net profit to $700 million [1] Revenue Performance - Nike Brand generated $11.4 billion in revenue, with growth in North America offset by a decline in Greater China [3] - Nike Direct revenue was $4.5 billion, down 4% year-over-year, primarily due to a 12% drop in Nike Brand Digital sales [3] - Wholesale revenues increased by 7% to $6.8 billion, while Converse brand revenue saw a significant 27% decline [3] Market Expectations - Analysts from Jefferies anticipated an EPS of $0.29 and revenue of approximately $11.2 billion, while Zacks Research predicted an EPS of $0.28 with $11 billion in sales, indicating a potential 5% decline in sales [2] Gross Margin and Inventory - The company's gross margin decreased by 320 basis points to 42.2%, attributed to lower average selling prices, higher discounts, and increased tariffs in North America [4] - Nike reported a 2% decrease in inventories to $8.1 billion compared to the previous year, with rising product costs due to higher tariffs partially offsetting the decline in units [5] Strategic Focus - CEO Elliott Hill emphasized the company's focus on priority areas such as North America, Wholesale, and Running, acknowledging the need for further work to align all sports, geographies, and channels [4] - CFO Matthew Friend noted that recovery across different parts of Nike's business will not be linear, highlighting the focus on controllable factors amid external challenges [6]