01—Abstract
Summary
Summary of the 10-Q filed October 1, 2025. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc. reported revenues of $11.72 billiona for the first quarter of fiscal 2026, a slight increase of 1% from $11.59 billion in the prior year period.
However, on a currency-neutral basis, revenues decreased by 1%b. The company experienced a notable decline in gross margin, down 320 basis points to 42.2% compared to 45.4% in the prior year. This was driven by increased discounting, higher product costs due to tariffs, and unfavorable channel mix.
Net income saw a significant decrease of 31% to $727 millionc, down from $1.05 billion in the same period last year, resulting in diluted earnings per share of $0.49, a 30% drop from $0.70. The company is actively managing inventory and pricing strategies, including increased markdowns in certain channels and reinvestment in wholesale distribution, which are expected to impact revenues and profitability in the near term but are intended to support long-term shareholder value. Cash flow from operations also decreased, reflecting lower net income and changes in working capital.
02—Key points
Key Highlights
- Total revenues grew 1% to $11.72 billion, but declined 1% on a currency-neutral basis.
- Gross margin contracted significantly by 320 basis points to 42.2%, impacted by higher discounts and tariffs.
- Net income fell 31% to $727 million, and diluted EPS decreased 30% to $0.49.
- NIKE Direct revenues decreased 4% (5% currency-neutral), driven by lower NIKE Brand Digital sales.
- NIKE Brand wholesale revenues increased 7% (5% currency-neutral), indicating a strategic shift.
- Inventories increased 8% sequentially to $8.1 billion.
- The company returned approximately $0.7 billion to shareholders through dividends and share repurchases, though share repurchases were moderated.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed October 1, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $11.72B$11.59B | +1.1% |
| Cost of Revenue | $6.78B$6.33B | +7.0% |
| Gross Profit | $4.94B$5.26B | −6.0% |
| SG&A Expenses | $4.02B$4.05B | −0.8% |
| Net Income | $727.00M$1.05B | −30.8% |
| EPS (Basic) | $0.49$0.70 | −30.0% |
| EPS (Diluted) | $0.49$0.70 | −30.0% |
| Shares Outstanding (Basic) | 1.48B1.50B | −1.4% |
| Shares Outstanding (Diluted) | 1.48B1.50B | −1.5% |
05—Questions
Frequently Asked Questions
What drove the decrease in gross margin?
The gross margin decreased by 320 basis points to 42.2% primarily due to lower NIKE Brand Average Selling Prices (ASP), which reduced gross margin by approximately 250 basis points. This was largely driven by higher discounts and an unfavorable channel mix. Additionally, higher NIKE Brand product costs, attributed to new tariffs in North America, decreased gross margin by approximately 100 basis points. A lower gross margin from Converse also contributed.
Why did NIKE Direct revenues decline?
NIKE Direct revenues decreased by 4% on a reported basis (5% currency-neutral) to $4.5 billion. This decline was primarily driven by a 12% decrease in NIKE Brand Digital sales, which fell from $2.3 billion to $2.0 billion. Sales in NIKE-owned stores also decreased by 1%, with comparable store sales declining by 1%.
What is NIKE's strategy regarding inventory and pricing?
NIKE is implementing strategies to rebalance its business, which include repositioning NIKE Brand Digital as a full-price platform and reinvesting in wholesale distribution. This involves liquidating excess inventory through increased markdowns across NIKE Direct and higher sales returns and discounts with wholesale partners. While these actions are expected to negatively impact revenues and profitability in the short term, the company believes they are necessary to reduce inventory, create capacity for new products, reignite brand momentum, and ultimately drive long-term shareholder value.
How did currency fluctuations impact the results?
On a currency-neutral basis, NIKE, Inc. revenues decreased by 1%, indicating that reported revenue growth was slightly positive due to favorable currency movements. However, the overall impact of currency on the income statement was mixed, with certain expenses like demand creation and operating overhead increasing due to unfavorable currency changes. The company actively uses derivative instruments to manage foreign currency exposures.
06—Continue