Please refer to Nike's earnings press release or Nike's website, investors.nike.com, for comparable GAAP measures and quantitative reconciliations. All growth comparisons on the call today are presented on a year-over-year basis and are currency neutral unless otherwise noted. It was intentional, it was necessary, and while it weighed on the quarter, it is improving the health of the marketplace, the quality of our revenue, and the foundation for more sustainable growth ahead. We responded by doubling production of Nike Mind over the next two seasons to meet demand from more than 2,000,000 consumers who signed up for Notify Me on nike.com.
These platforms are scalable foundations for growth that we can extend them into multiple sports and price points over time. You saw the early signs of those actions this quarter, and it is a critical step in our return to double-digit EBIT margins. From here, we expect that to translate into consistent growth in North America. Momentum in running continues to be strong, and we expect football, training, and basketball to return to growth over the next few quarters.
Sportswear continues to be a headwind to revenue growth as it declined low double digits in the quarter. Our teams are pulling levers to manage inventory and protect brand health, but this continues to be a headwind to gross margin profitability. Gross margins declined 130 basis points to 40.2% on a reported basis, primarily due to 300 basis points associated with higher tariffs in North America. Those investments also resulted in a higher fixed cost base that weighed significantly on our EBIT margins as revenue came down.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Through end of calendar 2026 (next nine months) | Down low single digits (North America gains offset by Greater China declines) |
| Gross margin inflection | Q2 FY2027 | Expected to inflect positively (Setting the table for earnings inflection) |
| Tariff gross margin headwind | Q1 FY2027 | Final quarter of material year-over-year headwind, assuming no significant changes (Headwind ending after Q1 FY2027) |
| Cost reset benefits | FY2027-FY2028 | Benefits begin in FY2027 and build through FY2028 (From supply chain and technology severance actions) |
| North America revenue | Next nine months | Modest growth (Even as it laps value liquidation) |
| Win Now actions completion | End of calendar 2026 | Expected to be finished (Aged inventory across marketplace healthy) |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | Flat reported, down 3% currency-neutral | Roughly five-point headwind from removing unhealthy classic franchise inventory |
| Gross margin | Down 130 bps to 40.2% | Primarily 300 basis points of higher tariffs in North America |
| North America revenue | Up 3% (wholesale up 11%) | New distribution, lapping marketplace management actions, and improving February sell-through |
| EMEA revenue | Down 7% | Double-digit sportswear decline, higher promotions, soft traffic, and Middle East disruption |
| Greater China revenue | Down 10% (wholesale down 13%) | Managed-down sell-in and marketplace cleanup, partially offset by double-digit running growth |
| Sportswear | Down low double digits | Still early in its comeback and declining double digits across all geographies |
| Earnings per share | $0.35 | Reported result, including a $230 million severance charge and offsetting legal settlement income |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Comeback stage | Middle innings | Far enough into the work to set a fall Investor Day; Win Now actions to finish by end of calendar 2026 | Progressing toward completion |
| Cost base reset | Not previously detailed | $230 million severance charge in supply chain and technology, shifting to a more variable cost structure | Newly initiated |
| Tariffs | Approximately 320 bps gross, 120 bps net FY2026 | 300 bps of Q3 margin impact; Q1 FY2027 to be final material year-over-year headwind | Nearing end |
| Greater China | Unplanned obsolescence, longest road | Forward progress, store pilot at 100 doors, but revenue headwind continuing into FY2027 while profitability bottoms sooner | Early improvement |
| EMEA | Healthy marketplace, building momentum | Down 7%, elevated inventory expected at Q4 exit, sportswear and Middle East pressure | Worsening near term |
| Sport Offense product flow | Activated September | Spring 2027 will be first quarter of product flowing from the Sport Offense | Pipeline building |