For decades, Nike was more than a sneaker company. The Swoosh was on the athletes people idolized, the teams they grew up watching, and the shoes kids saved up to buy. It became a symbol of ambition, competition, and winning. Meanwhile, Nike grew into one of the most admired consumer brands in the world.

Investors were rewarded along the way. From 2010 through 2021, Nike shares compounded at 23% annually, dramatically outperforming the market. By the time the stock peaked in late 2021, it was hard to imagine a company this dominant losing its footing. Nike had already survived recessions, shifting fashion cycles, and generations of competitors.

Then almost everything started moving in the wrong direction. The product lost energy, competitors gained ground, China deteriorated, and a push toward Nike Direct strained relationships with wholesale partners. Today, shares are at a fraction of their peak, leaving one of the world’s most iconic brands in one of the hardest stretches of its modern history.

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Nike is the world’s largest athletic footwear and apparel company, selling through both wholesale partners and Nike Direct. Q1 showed a widening split in the business: performance categories kept growing, while Sportswear, Jordan, and Greater China dragged total revenue down.

Quarter at a Glance

What Mattered

1/ Performance Shows Progress

The clearest bright spot this quarter was Nike’s performance portfolio, which grew high single digits on top of mid-single-digit growth in FY2026. The strength was broad-based. Running, global football, tennis, and golf all grew double digits, while training also grew and basketball returned to double-digit growth in North America. Excluding the reset underway in Greater China, management said the performance portfolio would have grown low double digits.

Management tied much of that progress to Nike’s Sport Offense, its strategy of organizing smaller cross-functional teams around individual sports and bringing product, marketing, and marketplace execution closer to specific athletes and consumers. Running was the first team to move into the model and grew double digits again in Q1. Nike said the strength of the Vomero franchise helped it nearly triple its share of the max-cushioning category over the past year. Global football also benefited from the World Cup, driving strong double-digit growth across all four geographies, while basketball grew double digits in North America and Nike continued expanding its women’s signature business.

The performance momentum itself is not new. Running and several other performance categories had already been growing strongly in prior quarters, but Q1 showed that strength across a wider set of sports. Management pointed to that breadth as another proof point for the Sport Offense beyond running.

2/ The Turnaround Gets Harder

Performance growth was not enough to offset Nike’s biggest headwinds. Nike Sportswear, Jordan Brand, and Greater China remained the biggest drags on the business, and management is taking more deliberate action across all three. Sportswear, which accounted for just under half of Nike’s revenue, declined low double digits. Some of that was intentional, including a nearly 50% reduction in Dunk revenue that created roughly a $200M headwind, but management also acknowledged that several older, higher-volume footwear styles sold through below expectations. That weakness is now affecting future wholesale order books as Nike works through excess inventory with its partners.

Jordan is facing a similar supply problem. The brand represented 13% of Q1 revenue and declined mid-teens, with CEO Elliott Hill acknowledging that Nike had oversupplied iconic retro product. Nike plans to reduce the volume and frequency of certain retro launches to restore scarcity, with North America expected to feel the biggest near-term impact.

Greater China remains the most severe geographic problem. Revenue fell 26% CC, worsening from declines of 10% in Q3 and 17% in Q4. Nike is narrowing digital distribution, investing in higher-quality physical retail, and developing more locally designed product, but management expects the cleanup to take multiple seasons. CFO Dave Denton said the FY2027 outlook assumes China gets worse from a revenue perspective over the balance of the year.

3/ Nike Announces PACE

Nike added another layer to its turnaround this quarter with PACE, a company-wide operating model transformation designed to scale the Sport Offense across the entire organization. The program is intended to move decisions and resources closer to consumers, reduce organizational layers, and give local teams more ownership over their markets.

The changes touch several parts of the company. Nike is working to make its supply chain more flexible and cost-efficient, establishing a new capability center in Bengaluru. Additionally, it is reducing its geographic structure from four regions to three: the Americas, EMEA, and Asia Pacific & Greater China. Teams are expected to move into that new formation in FY2028. Nike also plans to reshape its workforce, adding capabilities in some areas while eliminating duplication and reducing the overall number of roles over time.

Financially, Nike expects PACE to generate approximately $2.5B in cumulative savings through FY2031, with roughly $1B of implementation charges, in addition to about $300M of severance costs recognized in FY2026. Nike expects roughly $300M of PACE-related charges in FY2027 and plans to reinvest a portion of the savings back into the business. CFO Dave Denton said some savings are already beginning to show up, but the largest benefits are expected in FY2029 and FY2030.