TLDR
- Nike beat Q1 earnings estimates with 49 cents per share versus the expected 27 cents, and revenue rose 1% to $11.7 billion instead of the projected 5% decline
- Wholesale revenues jumped 7% year over year, driven by strong consumer response to running products, while the spring order book shows higher numbers than last year
- Gross margin fell 3.2 percentage points to 42.2% due to inventory discounts and higher tariffs, with net income down 31% from the prior year
- China sales dropped 9% as foot traffic slowed and required more discounting, while Converse sales fell 27% and direct-to-consumer sales decreased 4%
- JPMorgan raised its price target to $100 from $93 and increased fiscal 2026 EPS estimate to $1.42 from $1.32, maintaining an Overweight rating on the stock
Nike posted better-than-expected first quarter results that sent shares up 3.5% in after-hours trading. The company reported earnings of 49 cents per share for the quarter ended August 31.
Wall Street had expected just 27 cents per share. Revenue came in at $11.7 billion, up 1% from the prior year.
Analysts had projected $11 billion in revenue. That would have represented a 5% decline.
The wholesale channel showed particular strength. Wholesale revenues rose 7% year over year.
NIKE, Inc., $NKE, Q1-26. Results:
📊 EPS: $0.49 🟢
💰 Revenue: $11.7B 🟢
📈 Net Income: $727M
🔎 Wholesale strength and North America growth offset softness in Direct and Greater China. pic.twitter.com/S8slrhmyPk— EarningsTime (@Earnings_Time) September 30, 2025
Running products drove much of this growth. Consumers responded positively to the category.
CEO Elliott Hill has been working to repair relationships with wholesale partners. The previous management team had pulled back from these retailers.
The spring order book tells an encouraging story. Orders are running higher than a year ago.
This suggests full-year wholesale revenue will likely return to growth. However, the company projects second-quarter revenue will drop by a low single-digit percentage.
This aligns with Wall Street’s forecast for a 3% decline. Nike expects gross margins to fall between 3 and 3.75 percentage points.
Mixed Results Reveal Challenges Ahead
Not everything in the report sparkled. Gross margin declined 3.2 percentage points to 42.2% in the first quarter.
Lower selling prices drove much of this decline. The company has been discounting to clear old inventory.
Higher tariffs in North America also hurt margins. Net income fell 31% from the year-ago period despite beating expectations.
The Converse business struggled. Sales dropped 27%.
Direct-to-consumer sales fell 4%. China sales dropped 9% as store traffic slowed.
The company needed more discounts to drive demand in China. Hill said the team is working urgently to improve performance there.
They’re focusing on performance wear and bringing in fresh inventory. These investments will take time to show results.
CFO Matthew Friend acknowledged the road ahead won’t be smooth. He said progress will not be linear as different parts of the business recover at different speeds.
External factors are creating headwinds. Consumers in the U.S. remain cautious about spending.
Tariffs have become a bigger problem. When Nike last reported earnings, most tariffs on Southeast Asia were around 10%.
Now they’re closer to 20%. The company predicts these levies will cost about $1.5 billion annually.
That’s up from a prior forecast of $1 billion. Hill told investors the company has a lot left to prove.
JPMorgan raised its price target on Nike to $100 from $93. The investment bank maintained an Overweight rating.
JPMorgan increased its fiscal 2026 earnings estimate to $1.42 per share from $1.32. The new price target is based on Nike’s historical 2x PEG average.
Multiple analysts adjusted their views. Morgan Stanley raised its target to $72.
Stifel increased its target to $68. HSBC lifted its target to $90.
Nike shares are down 7.8% this year. The stock has shed roughly 30% over the past three years.
Shares closed regular trading at $69.65 and rose to $72.15 in after-hours trading. The spring order book running higher than last year provides a tangible sign that wholesale partners are restocking Nike products.
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