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NIKE, Inc. (NKE) Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 results beat consensus on revenue, EPS, and gross margin: revenue $11.72B vs $10.99B*, EPS $0.49 vs $0.27*, and gross margin 42.2% vs 41.7%, driven by wholesale strength and running, partly offset by Direct weakness and China softness . EPS and margin beats versus S&P Global consensus.
  • Mix and pricing pressures persisted: gross margin fell 320 bps YoY to 42.2% on higher discounts, channel mix, and new tariffs; EBIT margin was 7.7% (vs 10.9% LY) .
  • Guidance: Q2 revenue down low-single digits; Q2 gross margin down ~300–375 bps (tariffs -175 bps); FY26 tariff net headwind raised to ~120 bps (from ~75 bps), with annualized incremental cost now ~$1.5B (from $1.0B) .
  • Near-term stock catalyst: broad-based beat vs consensus with positive wholesale order book (spring up YoY) and >20% running growth supports “Win Now” progress, tempered by tariffs, Digital declines, and China headwinds .

What Went Well and What Went Wrong

What Went Well

  • Running momentum and innovation cadence: “Nike running grew over 20% this quarter,” underpinned by revamped Vomero, Structure, and Pegasus and platform innovation (Air, Flyknit, ZoomX, React X) .
  • Wholesale strength and order book: Wholesale revenue +7% reported (+5% FXN) and North America wholesale +11% with spring order book up YoY .
  • North America recovery and marketplace elevation: North America revenue +4% with running, training, basketball each delivering double-digit growth; resets in premium environments and Amazon brand store outperformed .

What Went Wrong

  • NIKE Direct weakness: NIKE Direct revenue -4% reported (-5% FXN) on -12% Digital and -1% stores; company does not expect Direct to return to growth in FY26 .
  • Greater China softness: Revenue -9% YoY (FXN -10%); traffic and seasonal sell-through weak, requiring elevated promotions; EBIT -25% .
  • Margin compression from tariffs and discounts: Gross margin -320 bps YoY to 42.2% on higher discounts, channel mix, and higher North America tariffs; FY26 tariff net headwind lifted to ~120 bps .

Financial Results

Headline results vs prior periods and S&P Global consensus

MetricQ3 FY25Q4 FY25Q1 FY26 (Actual)Q1 FY26 Consensus*Surprise
Revenue ($B)$11.269 $11.097 $11.720 $10.990*+$0.73B
Diluted EPS ($)$0.54 $0.14 $0.49 $0.27*+$0.22
Gross Margin (%)41.5% 40.3% 42.2% 41.7%*+50 bps

Values with asterisk (*) are from S&P Global.
Values retrieved from S&P Global.

Profitability and mix

MetricQ3 FY25Q4 FY25Q1 FY26
EBIT ($B)$0.826 $0.296 $0.904
EBIT Margin (%)7.3% 2.7% 7.7%
Net Income ($B)$0.794 $0.211 $0.727
Effective Tax Rate (%)5.9% 33.6% 21.1%

Channel and brand mix

MetricQ3 FY25Q4 FY25Q1 FY26
NIKE Direct Revenues ($B)$4.7 $4.4 $4.5
Wholesale Revenues ($B)$6.2 $6.4 $6.8
Converse Revenues ($B)$0.405 $0.357 $0.366

Segment breakdown (Q1 FY26)

SegmentTotal Revenue ($M)YoY %
North America5,020 4%
EMEA3,331 6%
Greater China1,512 -9%
APLA1,490 2%
Converse366 -27%
Total NIKE, Inc.11,720 1%

KPIs and balance sheet

KPIQ3 FY25Q4 FY25Q1 FY26
Inventories ($B)$7.54 $7.49 $8.11
Cash & ST Investments ($B)$10.39 $9.15 $8.58
Dividends Declared per Share ($)$0.40 $0.40 $0.40 (declared, payable Oct 1, 2025)
Share Repurchases ($M)$499 $202 $123

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 FY26—Down low-single digits; ~+1 pt FX benefit New
Gross MarginQ2 FY26—Down ~300–375 bps; tariffs ~-175 bps New
SG&AQ2 FY26—Up high-single digits (DC up; overhead low-single digits) New
Other (income)/expense, netQ2 FY26—Expense $10–$20M New
Tax RateQ2 FY26 & FY26—Low-20% range New
Tariff net headwind to GMFY26~75 bps (prior) ~120 bps Raised headwind
Tariff annualized incremental costFY26 run-rate~$1.0B (prior) ~$1.5B Higher
Wholesale revenueFY26—Return to modest growth New
NIKE Direct revenueFY26—Not expected to return to growth New
SG&AFY26—Grow low-single digits New
FXFY26—Tailwind to reported revenue; minimal GM benefit due to hedges New
DividendsQ1 FY26—$0.40 per share declared, payable Oct 1, 2025 Confirmed

Earnings Call Themes & Trends

TopicQ3 FY25 (2Q ago)Q4 FY25 (1Q ago)Q1 FY26 (Current)Trend
“Win Now” actionsReinforced confidence; focus on sport-led product and brand Q4 had largest financial impact; headwinds to moderate Progress in running, NA, wholesale; progress not linear Improving execution
Sport Offense re-org—Announced “sport offense” realignment to lead with sport Launched in early Sept; cross-functional by sport/brand/channel Implementation phase
Digital & promotionsNIKE Direct down; Digital -15% Direct -14% in Q4 Digital -12%; fewer promo days, lower markdowns; Direct not returning to growth FY26 Tightening promos; traffic under pressure
Tariffs/Macro——Tariff cost run-rate now ~$1.5B; FY26 GM headwind ~120 bps Worsened headwind
China marketplace——Traffic and in-season sell-through weak; elevated promotions; longer digital events Ongoing headwind
Wholesale vs DirectWholesale -7% (Q3) Wholesale -9% (Q4) Wholesale +5% (constant), spring order book up Wholesale recovery
Running/product pipeline——Running +20%; revamped key franchises; innovation cadence returning Strengthening

Management Commentary

  • “This quarter NIKE drove progress through our Win Now actions in our priority areas of North America, Wholesale, and Running… I’m confident that we have the right focus in Win Now and that our new alignment in the Sport Offense will be the key to maximizing NIKE, Inc.’s complete portfolio over the long-term.” — Elliott Hill, President & CEO .
  • “Gross margins declined 320 basis points to 42.2%… due to higher wholesale discounts, higher discounts in our NIKE factory stores, increased product costs, including new tariffs, and channel mix headwinds.” — Matt Friend, CFO .
  • “With the new rates in effect today, we now estimate the gross incremental cost to NIKE on an annualized basis to be approximately $1.5 billion… we now expect the net headwind in fiscal 2026 to increase from approximately 75 basis points to 120 basis points to gross margin.” — CFO .
  • “Our running business continues to be a strong proof point of progress… Nike running grew over 20% this quarter.” — CEO .

Q&A Highlights

  • Order book and margin path: Spring order book up YoY; medium-term road to double-digit margins requires reigniting organic growth, improving full-price mix, and driving operating leverage; tariff headwinds moderate over time as mitigation actions annualize .
  • Digital strategy and promotions: Organic traffic down double-digits by design as promos and paid media were reduced; repositioning Digital alongside wholesale partners to build healthier, more profitable Direct over time; Direct not expected to grow in FY26 .
  • Greater China playbook: Win with sport-led assortments (running, training, basketball, football) and local storytelling; refresh monobrand stores, improve merchandising depth and sell-through; headwind to topline and margin through FY26 .
  • Inventory and wholesale margin cadence: Inventory units down in NA/EMEA/China; closeout mix normalizing; expect gross margin benefit in 2H from lapping clearance; wholesale partners’ inventory healthy, supporting innovation sell-in .

Estimates Context

  • Q1 FY26 actual vs S&P Global consensus: Revenue $11.72B vs $10.99B*, EPS $0.49 vs $0.27*, Gross margin 42.2% vs 41.7%*. All were beats, reflecting stronger wholesale shipments, running strength, and fewer Digital promos than modeled, partly offset by tariff costs and China softness .
  • Estimate adjustments: Given raised tariff headwind (~120 bps to FY26 GM) and Q2 gross margin guide (-300 to -375 bps), Street may lift FY26 revenue for wholesale but trim FY26 Direct and gross margin trajectories; China and Converse likely remain conservative in models .

Values with asterisk (*) are from S&P Global.
Values retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based beat vs consensus on revenue, EPS, and gross margin; strength concentrated in running and wholesale while Direct and China remain headwinds .
  • Tariff escalation is the principal new macro headwind (annualized ~$1.5B; FY26 net GM -~120 bps), pressuring near-term margins despite operational progress .
  • Wholesale recovery looks durable (spring order book up), positioning NIKE to leverage innovation pipeline into elevated partner channels .
  • Direct reset is intentional (promo pullback, reduced classic franchises); expect pressure through FY26 as mix normalizes toward full-price .
  • China remains a multi-quarter turnaround with elevated promotions and store refresh spend; monitor seasonal sell-through, store pilots, and traffic inflections .
  • Margin trajectory should improve in 2H as clearance laps, but tariff and China/Converse timelines cap near-term upside; watch Q2 GM cadence vs -300 to -375 bps guide .
  • Near-term trading setup: positive narrative shift from beats and wholesale momentum tempered by tariff and Digital headwinds; catalysts include running/football product drops, wholesale sell-in, and signs of China sell-through stabilization .

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