Nike Stock Sinks 9% as Weak 2027 Outlook Puts Turnaround Under Pressure

Nike stock is discovering that a turnaround can show signs of progress and still leave Wall Street wanting much more.

Shares of Nike (NYSE: NKE) sank nearly 9% in after-hours trading Thursday after the sportswear giant released its fiscal first-quarter 2027 earnings. Nike beat profit expectations, improved its gross margin and showed modest growth in North America. The problem was what management said about the rest of the year.

Nike expects revenue to fall by a high-single-digit percentage in fiscal 2027, while the company is preparing another round of job cuts as CEO Elliott Hill tries to accelerate a recovery that remains uneven. The reaction leaves Nike stock facing renewed pressure on Friday after years of market-share losses, weak sales in China and increasingly aggressive competition from newer sportswear brands.

Why Is Nike Stock Falling Today?

The biggest concern for NKE stock is no longer simply the latest quarter. It is Nike’s outlook. Nike reported fiscal Q1 revenue of $11.21 billion, down 4% from $11.72 billion a year earlier. Revenue came in below the $11.35 billion analysts expected, according to LSEG data cited by Reuters.

Profit provided a brighter spot. Net income declined 2% to $712 million, while diluted earnings came in at $0.48 per share. Analysts had expected about $0.44 per share.

Gross margin also improved by 60 basis points to 42.8%, helped primarily by lower warehousing and logistics costs. Selling and administrative expenses fell 3% to $3.91 billion. Those improvements were not enough to offset management’s warning that the broader recovery will take longer.

Nike Earnings Show China Remains a Major Problem

Greater China continues to be one of the biggest obstacles facing the Nike turnaround. Reuters reported that Nike’s sales in China fell 26% during the quarter, marking the ninth consecutive quarter of declining sales in the market. The company has struggled with intense local competition and a product lineup that has not generated enough momentum with Chinese consumers.

Weakness extends beyond China. Nike Brand revenue fell 4% overall. EMEA sales declined, while North America provided some offsetting growth. Nike Direct revenue dropped 8% to $4.14 billion, including a 13% decline in Nike Brand Digital sales.

The product breakdown tells a similar story. Footwear revenue, Nike’s largest category, fell 6% to $6.95 billion. Equipment revenue declined 3%, while apparel was the exception, increasing 2% to $3.38 billion. For investors watching Nike stock earnings, the challenge is clear: cost control is improving faster than sales.

Nike Turnaround Brings More Job Cuts and $2.5 Billion Savings Plan

Hill, who returned to Nike as CEO in 2024, is now taking a more aggressive approach to the company’s restructuring. Nike unveiled a new operating model called Pace, designed to simplify the business and expand the progress management says it is seeing from its “Sport Offense” strategy.

The company expects Pace to deliver approximately $2.5 billion in cumulative savings through fiscal 2031. Nike also expects around $1 billion in associated pre-tax charges, primarily employee-related costs, over the same period.

Reuters reported that the restructuring will include further job cuts, although Nike has not disclosed how many positions will be eliminated. The company is also reorganising its geographical structure around the Americas, EMEA, and Asia Pacific and Greater China.

We have more work to do in NIKE Sportswear, Jordan Brand and Greater China.

Hill said in the company’s earnings release.

Nike Revenue Forecast Disappoints Wall Street

The Nike fiscal 2027 outlook explains much of the negative reaction in NKE shares. Nike expects full-year revenue to decline by a high-single-digit percentage. Adjusted diluted earnings are forecast between $1.15 and $1.35 per share, excluding approximately $0.15 of restructuring expenses associated with Pace.

The guidance suggests Nike’s turnaround remains a longer-term project rather than a rapid return to growth.

Competition is another concern. Nike has been fighting for consumer attention against brands including Adidas, On and Hoka, particularly in running, where younger rivals have gained momentum.

The company also recently lost football star Kylian Mbappé to Swiss rival On, adding another symbolic challenge for a brand built partly around its relationships with the world’s biggest athletes. Reuters noted that investors remain concerned about Nike’s product innovation and increased discounting.

Nike Stock Outlook: Can NKE Recover?

The Nike stock outlook now hinges on whether Hill can turn operational improvements into sustainable sales growth. There are encouraging signs. North American sales increased, gross margin improved and operating overhead fell 6%. Nike is also spending more heavily on brand marketing, with demand-creation expenses increasing 5%.

But Wall Street now has to weigh those improvements against declining footwear sales, continued weakness in China, falling digital revenue and a full-year forecast pointing to another significant contraction.

That explains why an earnings beat was not enough for Nike stock. The next major checkpoint arrives in November, when Nike plans to provide updated fiscal targets. Until then, investors will be looking for evidence that the turnaround is beginning to restore demand, not simply reduce costs.