Nike lays the groundwork for recovery

Nike, the global leader in the sportswear market, has seen better days. On its Q1 2027 earnings call on October 1, it revealed another restructuring plan. (The last one was announced in 2023.)

This plan should result in about $2.5 billion in savings, the majority in fiscal years ’29 and ’30. Meanwhile, the S&P 100 dropped Nike last month, and the company’s Q1 2027 revenues fell 4%. Not necessarily an easy first earnings call for Nike’s relatively new CFO, David Denton.

The former Pfizer CFO joined in August. On the Q1 call, Denton said one of his main focuses is bringing sustainable growth to Nike’s performance business, which houses running, football/soccer, training, basketball, tennis, and golf. But “from a financial standpoint, the quarter continues to be defined by two different realities,” he said. “Our Nike performance portfolio delivered strong growth while Nike sportswear, the Jordan Brand, and Greater China remain significant headwinds to our consolidated results.”

“Overall,” Denton said Q1 earnings were “largely in line with our expectations for the quarter but clearly below the company’s long-term potential.” For fiscal 2027, Nike expects “revenues to decline in the high single-digit range,” he said.

As has been widely reported, Nike has been “oversupplying…iconic retro product” like Air Jordans, “asking [those brands] to do too much,” Nike CEO and President Elliott Hill said on the earnings call. “With Jordan Brand footwear, we’re going to get back to leading the scarcity model that we created.”

Denton said the company would “continue to take actions to reduce supply across key parts of the marketplace in support of a healthier marketplace environment and stronger full-price realization.”

Cachet loss. Matt Powell, sportswear industry advisor at his firm, Spurwink River, told CFO Brew that he still expects Nike can “get back to something like low single-digit growth.” Powell said he’s been “hearing from retailers that the product for spring and more so for fall is looking much better. They’re finally getting newness and freshness in the market.”

But “the loss of the cachet around the iconic products, J1 [Air Jordan 1], Air Force 1, hurts them, because they sold a lot of those shoes on Nike.com, and they’re just not desirable right now because there’s still too many pairs.”

“We’ll be talking about a different Nike going forward,” Powell said. “[It will] still [be] the number one brand in the marketplace, no danger of giving that up. Back to growth, but not phenomenal growth. Back to profitability—probably could be decent there, but they’re just not going to be the gorilla that we remember.”

“Our priority is to direct more resources toward the consumer, sport, product innovation, and the growth opportunities with the greatest long-term potential,” Denton said on the earnings call.

When an analyst on the call asked Denton about the company’s dividend, the CFO said “it is a significant priority in the capital allocation program.”

Even at a time when Nike’s losing revenue and undergoing a major transformation, Powell said, “keep[ing] your shareholder dividend as intact as you can” is a “sacred cow” for companies like Nike, “even though it’s sort of money going out the window,” he admitted.

“But I do think it’s a way of saying to the shareholders, ‘We appreciate you, we thank you, and here’s our gift back to you.’”