Nike Faces First-Quarter Test as Shares Sit Down 40% for the Year

Nike is expected to report earnings of 43 cents per share on revenue of $11.32 billion for its fiscal first quarter when it releases results after the bell Thursday, according to an analyst survey by LSEG. The report lands with the stock down more than 40% this year.

CEO Elliott Hill is still struggling to restore sales growth and relevance at the sneaker giant, and the numbers underpinning that challenge are stark. Last quarter, North America — Nike's largest market — generated $4.83 billion in revenue, short of the $4.88 billion Wall Street expected, according to StreetAccount.

What does the China problem look like?

China, once a lucrative growth engine, has become the sharpest drag on results. Sales there dropped 12% last quarter. Hill addressed the decline directly on a call with analysts in June, saying Nike is "fully committed" to winning back that market.

Former Chief Financial Officer Matt Friend had previously guided that Nike expects sales for the first two quarters of fiscal 2027 to be "flattish," citing the slump in China among other pressures. Friend has since been replaced: former Pfizer executive David Denton took over as CFO in August.

One metric should offer modest relief. Nike said it expects gross margin for the first fiscal quarter to be slightly positive compared with the prior-year period.

Why did Bank of America downgrade the stock?

Bank of America analysts downgraded Nike from neutral to underperform in a note last week, writing that "risks are rising" for the company amid overall sluggishness in the sneaker category. The note also flagged likely further disappointing results in China and sustained stock declines.

Analysts remain cautious on the full-year picture. For the current fiscal year, they expect total revenue of around $45.31 billion, according to LSEG, with second-quarter revenue of roughly $11.79 billion.

Where has Nike caught a break?

The company's previous quarter got a significant lift from a nearly $986 million tariff refund, which contributed 52 cents per share to earnings. It was one of the few bright spots in an otherwise difficult stretch.

The turnaround plan under Hill focuses on improving separate parts of the business at different rates based on priority. That effort is running into a consumer under increased macroeconomic pressure, as geopolitical tensions and higher inflation slow spending.

Nike will host its conference call with analysts at 5 p.m. ET Thursday, where the focus will fall on whether Hill's China recovery pledge and the modest gross margin improvement can offset a deteriorating demand backdrop.