Nike (NKE -4.97%) stock tumbled 5.4% through 10:25 a.m. ET Friday after reporting only mixed earnings in its fiscal Q1 2027 report last night.
Heading into earnings, analysts expected Nike to earn $0.44 per share on sales of $11.35 billion. The good news is that Nike beat on earnings, reporting a per-share profit of $0.48. The bad news is that Nike nonetheless missed on earnings, reporting only $11.21 billion.
And the worst news is that Nike also cut guidance.
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Nike Q1 earnings
Nike's sales slumped 4% year over year in Q1, "consistent with our expectations," according to CFO Dave Denton. On the plus side -- and probably why the company's earnings exceeded expectations -- Nike enjoyed a 60-basis point improvement in its gross profit margin, which reached 42.8%. This was despite Nike's selling, general, and administrative expenses declining only 3% -- less than the sales slowdown. Nevertheless, earnings declined 2% year over year.
Nike blamed falling sales in China and Europe for the declines, noting that growth in North America "partially offset" these declines.
Wholesale sales through stores declined only 1%. More concerning was the slippage in higher margin direct sales to consumers through Nike's website. "Nike Direct" sales declined 8% year over year, with NIKE Brand Digital sales in particular down 13%.
NYSE: NKE
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What's next for Nike
And Nike investors can expect things to get worse before they get better. Turning to guidance, Nike warned that revenues will fall in the "high-single digits" over the course of fiscal 2027. Earnings per share could be as little as $1 to $1.20. Taken at the midpoint, this implies a nearly 50% decline from the $2.10 per share Nike earned in fiscal 2026.
On a $33 stock that works out to a P/E ratio of 30 -- too much to pay in my book, for a fading star with shrinking profits.
