Q1 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $11.2 billion | Down 5% currency-neutral |
| Gross Margin | 42.8% | Up 60 basis points |
| Earnings per share | $0.48 | Down 2% versus last year |
| Greater China Revenue | Declined 26% | Not stated |
| North America Revenue | Up 2% | Not stated |
Guidance and outlook
- For fiscal 2027, we currently expect revenues to decline in the high single-digit range.
- We currently expect fiscal 2027 adjusted earnings per share to be in the range of $1.15 to $1.35.
- We expect EBIT to decline by a greater percentage than revenue.
How management sounded
Balanced (+2 on our -10 to +10 scale). Management is transparent about the need for a multi-year turnaround in key segments like Sportswear and China, leading to near-term revenue pressure and a cautious fiscal 2027 outlook. Management sounded more upbeat than on 0% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Performance vs. Sportswear and Jordan sizing
Asked: Simeon Siegel (Guggenheim) asked for the split between performance and sportswear/Jordan in the U.S. and the confidence in the guidance.
Answer: Elliott Hill noted performance grew high single digits, while David Denton emphasized the guidance range is based on a comprehensive bottom-up review of business realities.
Greater China strategy
Asked: Brooke Roach (Goldman Sachs) asked about the cadence of pressure in China and if more strategic actions are needed.
Answer: Elliott Hill explained they are cleaning up digital distribution and elevating physical retail, while David Denton noted the guidance assumes China revenue performance worsens for the balance of the year.
Pace program details
Asked: Sam Poser (Williams Trading) asked about the Pace project and speed to market.
Answer: Elliott Hill explained Pace is about scaling the Sport Offense, optimizing the supply chain, and moving to three geographies to get closer to the consumer.
Dividend sustainability
Asked: Michael Binetti (Evercore ISI) asked about the dividend priority given the top-line challenges.
Answer: David Denton stated the dividend remains a significant priority and they have support for maintaining and growing it over time.
What to watch before the next call
- The upcoming Investor Day in November, where management will provide a long-term growth algorithm and more details on the Pace program.
- The impact of the Pace operational changes on the P&L as the company works to streamline decision-making.
- The progress of the marketplace reset in Greater China and the Sportswear segment, which management expects to impact results through fiscal 2028.
