Nike Inc. (NKE) F1Q27 Earnings Review: Mid-term earnings power in focus as sportswear/China pressures intensify; FY27 guidance introduced + November Investor Day the next catalyst

Alongside FQ1 results, NKE introduced FY27 guidance materially below FactSet expectations and introduced Pace, a new operating model transformation plan. While NKE continues to demonstrate healthy growth in its performance business, this is more than offset by significant pressure in its Sportswear, Jordan, and China businesses. Given the scale of these businesses, Nike outlined that the significant actions the company is taking to return the business to a healthy marketplace will meaningfully impact FY27 and continue into FY28. Margins are also now expected to come under pressure as a result of deleverage. While this represents a significant reset, strategic actions continue into FY28 and NKE will have to lap the tailwinds from the World Cup. As a result, we expect the key debate from here to be the earnings power of NKE in FY28 under various scenarios and the pace of potential revenue and profit recovery ahead. We are Neutral rated on NKE.