Nike earnings preview: can the turnaround finally gain traction? 

Nike earnings preview: can the turnaround finally gain traction?

Nike reports its fiscal first-quarter 2027 results after the US close on Thursday 1 October, with investors looking for evidence that CEO Elliott Hill's turnaround strategy is beginning to translate into stronger sales and a more sustainable recovery in margins.

The results arrive at a difficult point for the sportswear giant. Nike's shares have fallen sharply this year and are trading close to multi-year lows, reflecting growing investor impatience with the pace of the recovery. The company has spent almost two years trying to reset its product range, rebuild wholesale relationships and refocus on its core sporting franchises, but sales remain under pressure.

The first-quarter figures will therefore be less about whether Nike can produce a quarterly earnings beat and more about whether management can demonstrate that the foundations of its recovery are strengthening.

Those looking to trade around the results can do so through spread betting or CFD trading, while longer-term investors can access Nike shares  through IG Invest or our share dealing service.

What is expected from Nike's results?

According to LSEG Data & Analytics, analyst consensus currently points to first-quarter revenue of roughly $11.32bn, down around 3% year-on-year, with adjusted earnings per share of approximately $0.43, around 11% below the comparable period last year.

That would follow a weak end to fiscal 2026.

Nike reported fourth-quarter revenue of $11.0bn, down 1% year-on-year and 4% on a currency-neutral basis. Wholesale revenue increased 4% to $6.6bn, but NIKE Direct revenue fell 7% to $4.1bn, with digital sales down 12%.

For the full year, revenue was $46.4bn, broadly flat on a reported basis and down 2% currency-neutral, while net income fell 3% to $3.1bn.

Management warned in June that revenue was likely to decline through the first half of fiscal 2027, meaning investors should not necessarily expect an immediate return to top-line growth.

China remains a major problem

The performance of Greater China will be one of the most important areas to watch.

Nike has struggled to regain momentum in the region as competition from domestic brands remains intense and consumer demand has weakened. Greater China revenue fell by double digits in the fourth quarter, contributing to the company's broader sales decline. The persistent weakness in China was one of the reasons the market remained unconvinced by Nike's turnaround.

China is strategically important because it has historically been one of Nike's largest international markets and a significant contributor to profitability.

Management has acknowledged that Nike needs to do more to connect with Chinese consumers, improve its retail presence and reduce its reliance on discounting.

The October results should therefore provide an indication of whether the decline is stabilising or whether China remains a significant drag on group performance.

Can new products reignite demand?

Nike's turnaround strategy is increasingly centred on a shift away from products that became overly dependent on lifestyle and casual demand and towards its core performance sports franchises.

Running, basketball and football are among the areas receiving greater attention, with products such as the Vomero and Pegasus running ranges showing signs of stronger consumer interest.

That has also been noticed by Nike's wholesale partners. JD Sports' finance chief Dominic Platt recently told Reuters that performance products including Vomero and Pegasus were resonating well with customers, while describing Nike as still the strongest brand in the market.

The challenge is scale.

Nike is a huge business, and isolated successful launches will not be enough to reverse the decline unless they can generate sustained demand across its wider product portfolio.

Investors will therefore be looking for evidence that new product introductions are improving full-price sell-through and reducing Nike's reliance on promotions.

Margins could be the bright spot

Although sales remain weak, Nike has been working aggressively to improve profitability.

The fourth quarter provided a significant illustration of the potential. Gross margin jumped 890 basis points to 49.2%, although this included an approximately 900-basis-point benefit from the expected recovery of US tariffs paid under the International Emergency Economic Powers Act.

That means the improvement was heavily influenced by a one-off tariff-related benefit and should not be interpreted as a normalised margin level.

Nevertheless, management expects margins to improve as it reduces excess inventory, manages its product portfolio more carefully and controls costs.

That makes gross margin one of the most important numbers in the first-quarter results.

With revenue still under pressure, an improvement in profitability could help demonstrate that the turnaround is progressing even before sales growth returns.

Wholesale versus Nike Direct

Another important change in Nike's strategy is its renewed emphasis on wholesale partners.

For several years, Nike prioritised its own stores and digital channels, but it has increasingly sought to rebuild relationships with retailers such as JD Sports and other specialist sportswear distributors.

The fourth quarter provided early evidence of this shift: wholesale revenue increased 4% year-on-year, while NIKE Direct declined 7%.

The October results should show whether that divergence is continuing.

A sustained recovery in wholesale would be significant because it could broaden Nike's distribution, improve product visibility and reduce its dependence on its own digital channel.

At the same time, investors will want to see evidence that Nike Direct is stabilising rather than simply being sacrificed to support wholesale growth.

For those tracking Nike and wider sportswear sector dynamics through the stock market, our share dealing platform gives you the tools to invest directly in shares at competitive prices.

Inventory remains a key watchpoint

Inventory has also been a recurring issue.

Nike ended fiscal 2026 with inventory of $7.5bn, broadly unchanged from a year earlier, although units increased and product mix shifted.

Reducing excess inventory has been central to the turnaround because too much stock can lead to discounting, putting pressure on gross margins and potentially weakening the brand.

The market will therefore be watching inventory levels, markdowns and full-price sell-through closely.

A cleaner inventory position would give Nike greater flexibility to introduce new products without having to discount older ranges aggressively.

Dividends and buybacks

Despite the operational challenges, Nike continues to return substantial amounts of cash to shareholders.

The company returned approximately $2.5bn to shareholders in fiscal 2026, including $2.4bn in dividends and $123m of share repurchases. It also maintains a four-year, $18bn share-repurchase programme, although only a relatively small portion was used for buybacks during fiscal 2026.

The dividend therefore remains a more significant component of shareholder returns while management prioritises investment in the business and financial flexibility.

Investors will be watching whether improving cash generation allows Nike to accelerate repurchases as the turnaround progresses.

What to watch on 1 October

The key areas for investors are likely to be:

• Revenue: against expectations of roughly $11.4bn
• Greater China: whether the prolonged sales decline is beginning to stabilise
• North America: whether Nike's largest market continues to provide relative resilience
• Wholesale: can the recovery in wholesale sales continue?
• NIKE Direct: has the decline in digital and owned-store sales bottomed?
• Gross margin: evidence that inventory management and lower discounting are improving profitability
• Product innovation: demand for running, basketball and football products
• Inventory: whether stock levels and markdowns are becoming more manageable
• Fiscal 2027 outlook: any change to management's expectation for sales and earnings through the remainder of the year

The bottom line

Nike's 1 October results come at a critical point for the turnaround.

The company has already made significant strategic changes under Elliott Hill, including refocusing on performance products, rebuilding wholesale relationships and attempting to improve the quality of its inventory. However, the financial results have yet to provide convincing evidence of a sustained recovery.

The immediate outlook remains challenging, with management previously warning that revenue would decline through the first half of fiscal 2027.

The market will therefore be looking beyond the headline earnings figure. A stabilisation in China, stronger performance product, improving wholesale sales and evidence of sustainable margin expansion would all provide important clues about whether Nike's turnaround is gaining traction.

Conversely, another decline in sales combined with weak China performance and limited evidence of product momentum would reinforce concerns about how long the recovery will take.

With Nike shares already trading close to multi-year lows, expectations have fallen considerably. That makes the guidance and management's assessment of the path towards a return to growth potentially more important than whether the company narrowly beats or misses quarterly consensus estimates.

The central question on 1 October is therefore straightforward: is Nike still laying the foundations for a recovery, or is the turnaround taking longer than investors had expected?

Analyst ratings and Nike shares technical analysis

Analysts rate Nike as a ‘hold’ with a mean long-term price target of $46.92, around 31% above current levels (as of 30 September 2026).

TipRanks has a Smart Score of ‘1 Underperform’ and a ‘hold’ rating for Nike.

The Nike share price – down 38% year-to-date – has fallen by around 80% from its November 2021 peak at $179.10 and is trading at levels last seen in May 2014.

Support between the February-to-April 2014 lows at $35.30-to-$34.92 has so far held.

Nike monthly candlestick chart

Since July the Nike share price has been sliding within a clearly defined downtrend channel and hit a multi-year low at $35.22. If it and the February  2014 low at $34.92 were to be slipped through, the May 2013 peak at $33.04 and perhaps the minor psychological $30 region may be reached next.

Nike daily candlestick chart

For a medium-term bullish reversal to become a possibility, a move out of the downtrend channel and then rise above the July peak at $45.04 would need to be seen. This is a big ask, given the entrenched nature of the long-term downtrend.

Good resistance on the way up sits between the June-to-mid-August lows at $38.86-to-$40.11.

How to invest in Nike shares

1. Do your research on Nike, the fiscal Q1 2027 results on 1 October and the key metrics to watch
2. Download IG Invest or open a share dealing account with us
3. Search for Nike (NKE) in our platform or app
4. Choose the number of shares or value of money you'd like to invest
5. Place your trade