Nike sales fall as company sets out Pace restructuring plan

Nike reported on 1 October that revenue fell 4% to $11.2 billion in its fiscal 2027 first quarter, which ended on 31 August. The Beaverton, Oregon, sportswear company also announced a restructuring plan called Pace and forecast a further sales decline for the financial year. For customers, employees and investors watching its attempted recovery, the results show progress in profit margin alongside continuing weakness in sales.

Revenue fell 5% when currency effects were excluded, according to Nike’s results release. Net income was $712 million, down 2% from a year earlier, while diluted earnings per share slipped to $0.48 from $0.49. Gross margin rose 60 basis points to 42.8%, an improvement Nike attributed primarily to lower warehousing and logistics costs. The figures present a mixed picture: the company earned a larger share on each dollar of sales before other expenses, but sold less overall.

Where Nike’s first-quarter sales weakened

The differences between Nike’s markets were pronounced. North American revenue rose 2%, but revenue in Greater China fell 22%, or 26% excluding currency effects. Revenue in Europe, the Middle East and Africa fell 5%. Across the Nike brand, revenue declined 4% to about $11.0 billion. Those regional results help explain why a stronger gross margin did not translate into overall sales growth.

Sales through Nike Direct, which includes its own stores and digital business, fell 8% to $4.1 billion. Nike said brand digital sales fell 13% and sales at Nike-owned stores fell 5%. Wholesale revenue was $6.8 billion, down 1% overall, although sales to wholesale customers in North America rose 9%. The figures show that the company’s channels are moving at different speeds; they do not, by themselves, establish the cause of each decline.

What Nike says its Pace plan will do

In its results release, Nike described Pace as an operating-model change intended to extend the Sport Offense strategy. The company said it would modernise its global supply chain, establish a campus in India, realign its operations into three geographies and further streamline the organisation. Pace also builds on a cost realignment plan Nike announced in March 2026. The release does not give a completed timetable for each of the newly described changes.

Nike estimates that Pace will produce about $2.5 billion in cumulative savings through fiscal 2031. It also expects about $1.0 billion in pre-tax charges over that period, primarily related to employees, including roughly $300 million in fiscal 2027. The savings figure is stated before those charges and any future reinvestment. Nike cautioned that the estimates depend on assumptions and that actual savings and costs could differ materially.

For fiscal 2027, Nike expects revenue to decline by a high-single-digit percentage. Its forecast for adjusted diluted earnings per share is $1.15 to $1.35, excluding about $0.15 per share in Pace restructuring expenses. That adjusted measure is different from the $0.48 in diluted earnings per share reported for the first quarter. The outlook is Nike’s forecast for the full financial year, not a result it has already achieved.

Why the turnaround remains uncertain

The company’s own figures give reasons for both caution and encouragement. Gross margin improved and selling and administrative expense fell 3% to $3.9 billion, while sales declined across major parts of the business. Chief financial officer Dave Denton said the quarter was consistent with Nike’s expectations and credited improved gross margin and disciplined cost management. Those gains have yet to produce growth in total quarterly revenue.

In a BBC report published on 1 October, sports retail analyst Matt Powell argued that Nike had made strategic errors by shifting sales towards its own online channels and spending less attention on new product innovation. Those are Powell’s assessments of what went wrong, rather than findings established by Nike’s quarterly accounts. The reported 13% fall in digital sales gives readers a measure of current weakness in that channel, but does not prove what caused it.

The BBC also reported a recent high-profile change in Nike’s athlete roster: footballer Kylian Mbappé ended a long association with the brand to join Swiss rival On. Marketing and strategy academic Tim Derdenger told the BBC that current athlete partnerships matter to apparel sales more than historic ones. His view gives context to the loss of a prominent athlete; neither the partnership change nor his analysis establishes an effect on Nike’s first-quarter financial results.