Nike Guided to a High-Single-Digit Revenue Decline for Fiscal 2027 and Put $1.0 Billion of New Restructuring Charges Behind 'Pace' After Greater China Sales Fell 22%

by Bisi Oyelaran · October 2, 2026

Equities Reporter, US Market Current

Nike Inc. told investors on Thursday to expect fiscal 2027 revenue to "decline high-single digits," and paired the forecast with a new multi-year restructuring program it calls Pace that carries approximately $1.0 billion of pre-tax charges on top of roughly $0.3 billion of severance already booked last year. The outlook came with the company's fiscal first-quarter results, released after the close on Oct. 1 (EDGAR acceptance 4:15 p.m. ET): revenue of $11.2 billion, down 4% on a reported basis and 5% currency-neutral, and diluted earnings per share of $0.48 against $0.49 a year earlier, according to the release furnished as Exhibit 99.1 to Nike's Form 8-K.

The quarter itself was, in the company's own framing, unremarkable. "We delivered first quarter results consistent with our expectations, supported by improved gross margin and disciplined cost management," Chief Financial Officer Dave Denton said in the release. Gross margin expanded 60 basis points to 42.8%, which Nike attributed primarily to lower warehousing and logistics costs. Selling and administrative expense fell 3% to $3.9 billion, with operating overhead down 6% while demand creation spending rose 5% on "higher investment in key sports events." Net income was $712 million, down 2% from $727 million, on a 22.7% effective tax rate that was 160 basis points higher than a year ago which the company attributed primarily to foreign tax audit settlements recognized in the current year.

The geographic split is where the pressure shows. Greater China revenue fell 22% on a reported basis, and 26% currency-neutral, to $1.18 billion, with footwear down 22% and apparel down 23%. Earnings before interest and taxes for the region dropped 34% to $248 million from $377 million. Sales to wholesale customers in Greater China were down 28% reported. Europe, Middle East and Africa revenue fell 5% to $3.18 billion, driven by an 11% drop in footwear that outweighed 5% growth in apparel. North America, by contrast, grew 2% to $5.13 billion, with wholesale up 9% and EBIT up 3% to $1.17 billion.

The channel mix tells a related story. Nike Brand wholesale revenue of $6.8 billion was down 1%, while Nike Direct fell 8% reported and 9% currency-neutral to $4.1 billion, on a 13% decline in Nike Brand Digital and a 5% decline at Nike-owned stores. Converse revenue dropped 28% to $263 million, with declines in every territory, and the subsidiary's EBIT fell 36% to $25 million. Across the Nike Brand as a whole, footwear revenue was down 6% to $6.95 billion while apparel rose 2% to $3.38 billion.

Pace, the program disclosed under Item 2.05 of the 8-K, "includes and builds upon" the cost realignment plan Nike announced in March. According to the filing, the board approved steps that are expected to produce pre-tax charges of approximately $1.0 billion, "primarily of employee severance and other employee-related costs," with approximately $0.3 billion to be recognized in fiscal 2027 and the remainder through fiscal 2031. The company said the majority of the charges will result in future cash expenditures, and that all charges will be substantially incurred by the end of fiscal 2031, "subject to local law requirements."

The program's components, per the 8-K, are a further optimization of the global supply chain, a new campus in India, a realignment of the operating model into three geographies, and "further streamlining of the organization to reduce costs." Nike expects Pace to deliver approximately $2.5 billion in cumulative savings through fiscal 2031. The filing is explicit that the savings figure "is stated before the expected pre-tax charges described above and any future reinvestment," and that actual savings, charges and cash outlays "may differ, possibly materially" from the estimates.

The March plan that Pace absorbs was itself sizeable. In a Form 8-K filed March 5, Nike disclosed that management had approved organizational changes on Feb. 27 that, together with previously approved actions, were expected to produce pre-tax charges of approximately $300 million for the nine months ended Feb. 28, 2026, primarily severance, with substantially all of it recognized in the fiscal third quarter. That filing also warned the company "may take additional actions which could lead to additional charges in future quarters." Thursday's disclosure is that addition, at roughly three times the earlier figure on our arithmetic ($1.0 billion against $300 million).

For context, Nike is a Beaverton, Oregon-based designer and distributor of athletic footwear, apparel and equipment, and it closed fiscal 2026 on May 31 with revenue of $46.4 billion, flat on a reported basis and down 2% currency-neutral, net income of $3.1 billion and diluted EPS of $2.10, down 3%, according to its June 30 results release. That fourth quarter carried an unusual item: the company recognized $986 million for the expected recovery of tariffs paid under the International Emergency Economic Powers Act, which the release said increased fourth-quarter gross margin by approximately 900 basis points (the quarter's gross margin was 49.2%, up 890 basis points) and contributed $0.52 of the quarter's $0.72 in diluted EPS. The June release did not include a fiscal 2027 outlook section; Thursday's did.

The outlook has three lines. Revenue is expected to decline high-single digits for the year. The effective tax rate is expected to be "in the mid-20 percent range, subject to changes in earnings mix and discrete tax items." Adjusted diluted EPS, a non-GAAP measure that strips out restructuring and severance charges, is expected in a range of $1.15 to $1.35, which the release says "excludes approximately $0.15 of restructuring expenses related to Pace for fiscal 2027." Measured against fiscal 2026's reported $2.10, the midpoint of the adjusted range would be a decline of roughly 40% on our arithmetic, although the two figures are not on the same basis: the fiscal 2026 number is GAAP and includes the tariff-recovery benefit, while the fiscal 2027 range is adjusted.

Thursday's release is also the first quarterly report under Denton, whom Nike named chief financial officer on June 23 with an effective date of Aug. 17. He joined from Pfizer, where he had been CFO since May 2022, and earlier held the same role at Lowe's and CVS Health, according to the June announcement. Chief Executive Elliott Hill, in Thursday's release, said the company has "more work to do in NIKE Sportswear, Jordan Brand and Greater China" and is "taking deliberate actions to strengthen those businesses the right way for the long-term."

On the balance sheet, inventories were $7.8 billion at Aug. 31, down 3% from a year earlier, which Nike attributed primarily to shifts in product mix. Cash and equivalents plus short-term investments totalled $8.4 billion, down about $0.2 billion, as operating cash flow was more than offset by dividends and capital spending. The current portion of long-term debt stood at $2.0 billion against zero a year earlier, while long-term debt fell 26% to $5.9 billion. The company paid approximately $610 million in dividends in the quarter, up 3%; the release did not report any share repurchases for the period.

Nike shares closed Thursday at $35.15, before the release, according to Yahoo Finance historical data. The stock's reaction will register in Friday's session, which had not closed at the time of writing, and the company was scheduled to hold its conference call at 2:00 p.m. Pacific on Oct. 1, with an archived webcast available through Oct. 29.

What remains unknown is how much of the $2.5 billion in projected savings will reach the bottom line. The 8-K specifically carves out "any future reinvestment" from the savings estimate and does not quantify it. Nor did the release break the high-single-digit revenue decline down by geography or channel, or say how much of it reflects the deliberate repositioning of Sportswear and Jordan Brand that Hill referenced versus underlying demand. The company's quarterly report on Form 10-Q for the period, which will carry the restructuring reserve roll-forward and segment detail, had not been filed as of Friday morning. The next scheduled data point is the second-quarter report covering the holiday-season period ending Nov. 30.