Nike (NKE) Surprises With Q1 Revenue Gain as Turnaround Gains Traction

Nike (NKE) delivered a surprise revenue increase in its fiscal first quarter, signaling that CEO Elliott Hill’s turnaround strategy is beginning to take hold. The sportswear giant reported revenue of $11.72 billion, a 1% rise from a year earlier, beating analysts’ expectations of a 5.1% drop. Earnings per share came in at 49 cents, nearly double the 27-cent consensus estimate. Shares rose 1.5% in early trading as investors welcomed signs of stabilization, even as management struck a cautious tone about the recovery’s trajectory.

The results showed progress in Nike’s wholesale strategy, where the company is rebuilding ties with retail partners after years of prioritizing direct-to-consumer channels. However, challenges persist. Margins contracted by 320 basis points to 42.2%, hurt by tariffs, currency headwinds, and higher input costs. Analysts flagged continued weakness in China and competitive pressure from younger rivals such as On and Deckers’ Hoka, which are capturing market share in performance and lifestyle categories once dominated by Nike.

• Nike reported Q1 revenue of $11.72 billion, up 1% year-over-year.
• EPS of 49 cents beat estimates of 27 cents, boosting investor sentiment.
• Shares rose 1.5% on cautious optimism about turnaround progress.

• Margins fell 320 basis points to 42.2% amid tariffs and cost pressures.
• Wholesale business showed early signs of recovery, but DTC softness persists.
• Inventories fell 2% year-over-year, suggesting progress on stock management.

• CEO Elliott Hill is refocusing the brand on core sports and innovation.
• Nike launched a women’s line, NikeSkims, to compete with Lululemon.
• China remains a key risk, while U.S. tariffs continue to weigh on costs.

• Nike’s fiscal Q1 beat expectations, with revenue rising 1% and EPS nearly doubling consensus, providing early evidence that CEO Elliott Hill’s turnaround and renewed wholesale strategy are gaining traction.
• The company’s efforts to rebuild relationships with retail partners and right-size inventory—shown by a 2% year-over-year decline in stock—signal improving operational discipline and foundation for more efficient channel management ahead of key seasons.
• New product innovation—including a renewed focus on core sports and the launch of the NikeSkims women’s line—positions Nike to recapture market share in growing categories and better compete with athleisure leaders like Lululemon.
• Despite continuing cost headwinds, Nike’s surprise performance and candid management tone boost investor confidence, reflected by the early share price gain on results day.
• For sales and product teams: Expedite wholesale activations and accelerate women’s product launches to capitalize on favorable sentiment and strengthen retailer partnerships through tailored, in-demand assortments.

• Gross margins tumbled 320 basis points due to persistent tariff, currency, and input cost pressures, underscoring that profit recovery may lag revenue—and casting doubt on near-term earnings power if cost inflation continues or U.S. tariffs linger.
• China remains a weak spot, and competition from brands like On and Hoka is intensifying, with rivals gaining ground in both performance and lifestyle categories where Nike had previously held dominance.
• Softer direct-to-consumer (DTC) results highlight ongoing execution risk in key digital and owned channels, raising questions about whether Nike can fully regain its previous momentum in a fast-shifting retail environment.
• With management cautious on the outlook and recovery expected to be uneven, investors face uncertainty about the sustainability of these “green shoots”—especially if macro pressures worsen or new product launches fail to gain broad traction.
• Action item for finance and supply chain: Closely monitor cost trends, inventory flows, and region-specific demand signals; maintain flexibility in marketing and distribution as geopolitical, channel, or brand risks present through the balance of the fiscal year.

Nike’s leadership highlighted that recovery will be uneven across geographies and channels. CEO Hill stressed a renewed focus on innovation in core sports like running, while CFO Matthew Friend noted that progress would not be linear given external headwinds. Meanwhile, the launch of NikeSkims in partnership with Kim Kardashian’s brand underscores Nike’s push into women’s athleisure, a fast-growing category dominated by competitors such as Lululemon.

The path ahead remains challenging as the company balances inventory discipline, margin pressures, and trade costs, projected at $1 billion annually due to tariffs. Yet Nike’s ability to surprise on revenue and earnings offers hope that its brand refocus and new product launches can regain momentum. For investors, the question remains whether this quarter marks the beginning of a durable turnaround or merely a temporary reprieve in a still-turbulent market environment.