The news: Nike’s revenues fell more than expected in its fiscal Q1, underlining the sustained challenges the sporting brand faces.

• Revenues fell 4% YoY on a reported basis to $11.21 billion, missing analyst expectations for $11.32 billion.
• The brand expects sales to decline by high-single digits in fiscal 2027, which runs to June 30, 2027.

Behind the numbers: Nike’s turnaround strategy has helped increase momentum in some key areas, but the company as a whole continues to have several weak points, including its sportswear business, the Jordan brand, and China.

The North American business is growing. Footwear revenues increased 1% YoY while apparel sales rose 6%. The company cited progress with its “Sport Offense” initiative, which is helping to restore Nike’s authority in sports such as running and soccer. But that growth comes with a cost: The brand spent $1.3 billion on “demand creation” in the quarter, a 5% increase YoY, due to heavy investments in the World Cup and other sporting events.

Elsewhere, Nike’s business is on shakier ground.

• Greater China revenues slumped 26%, reflecting the brand’s struggle to keep pace in a much more competitive market that is less amenable to Western brands. The situation in China could get worse before it gets better, especially as Nike prepares to cut ties with over 1,000 ecommerce distributors.
• Weakness at the Jordan brand is particularly consequential given that the product line is a core part of Nike’s business.
• Losing Kylian Mbappé to On Running is another blow that highlights Nike’s diminishing brand prestige as upstarts steal the limelight—and its superstars.

Implications for retail: Nike’s challenges are being compounded by a broader slowdown in sportswear demand. Shoppers’ tastes are shifting away from athleisure in favor of more structured, dressier clothes—making it difficult for Nike to drum up enthusiasm for its sportswear assortments. The brand is also contending with a highly promotional environment, challenging profitability.

Still, Nike’s difficult quarter increases the pressure on the company to deliver a turnaround plan that will shore up its China business and restore consumers’ interest in its core product lines.

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