Nike, Inc. (NYSE: NKE) has reported mixed first-quarter results, with earnings down year-over-year but ahead of estimates, and revenue rising above expectations. After a long slowdown, it appears that the company’s turnaround efforts are bearing fruit, benefiting from its Win Now and Sport Offense strategies, launched under CEO Elliott Hill who rejoined the company last year.
Stock Jumps
Nike’s shares rallied in after-hours trading on Tuesday, following the earnings release, reflecting investor optimism over the surprise sales growth. The momentum extended into Wednesday, and the stock traded about 14% above its April lows. The company has an impressive track record of returning cash to shareholders, increasing dividends for 23 consecutive years.
From Nike’s Q1 2026 Earnings Call:
“We’re getting back to delivering a relentless flow of innovation that serves real athlete needs, and we’re pulling it all the way through the marketplace in consumer-friendly ways. The early results have been positive, with Nike Running growing over 20% this quarter. Our opportunity is to quickly seize the benefits of a Sport Offense and apply them to more sports and sports culture, including global football, basketball training, and sportswear. I will remind you that each sport is in a different stage of development.”
Results Beat
The Oregon-based sneaker giant reported net income of $727 million or $0.49 per share for the first three months of FY26, compared to $1.05 billion or $0.70 per share in the year-ago quarter. Earnings beat estimates, marking the ninth beat in a row. Revenues rose to $11.72 billion in Q1 from $11.59 billion in the prior-year quarter, contrary to expectations for a decline. Wholesale revenues rose 7% annually to $6.8 billion. Nike Direct revenues were $4.5 billion, down 4% on a reported basis and down 5% on a currency-neutral basis.
While exuding confidence in its Win Now actions and new alignment in Sports Offence, the Nike leadership said it still has work to do with all sports, geographies, and channels. The key priorities of the management’s turnaround plan are the Running, North America, and Wholesale divisions. The Win Now initiative focuses on reviving brand power, restoring product relevance, and driving growth across key markets. The Sports Offense strategy aims at revamping Nike’s product creation, marketing, and merchandising around its core sport categories.
Hurdles
Currently, cautious consumer spending and uncertainties related to new trade tariffs are the main obstacles to the growth plan. The management now expects a gross incremental cost of around $1.5 billion from tariffs, on an annualized basis, because of tariffs. In Greater China — a strategically important market for the company — sales remain under pressure from macroeconomic challenges. Chana sales declined 10% in Q1. Another weak spot is Nike Direct, and the company said it does not expect the DTC segment to return to growth in fiscal 2026.
Nike’s stock was up 5% in early trading on Wednesday, extending its post-earnings gains. It is still 3% below the levels seen at the beginning of the year. The average price of Nike’s shares in the last 52 weeks is $71.63.
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