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NIKE (NKE) exceeded expectations in 1Q26, delivering both EPS and revenue upside. Revenue grew +1% yr/yr, better than its forecast for a mid-single-digit decline, as North American wholesale demand led the way (North America revenue +4%, wholesale +7%). Gross margin also beat, falling 320 bps to 42.2%, versus guidance for a 350-425 bps drop. The company attributed the upside to momentum from its “Win Now” strategy, which is beginning to show traction through innovation initiatives (Pegasus Premium, Vomero 18, NikeSKIMS) and stronger wholesale partnerships.

• Inventories declined 2% yr/yr, but NIKE Digital traffic fell by double digits as the company transitions to a full-price strategy.
• China revenue declined 10% yr/yr, with CEO Hill citing structural challenges and weak seasonal sell-through.
• Tariff headwinds worsened: NKE now expects a $1.5 bln impact (vs. $1.0 bln prior), pressuring FY26 gross margin by 1.2 percentage points.
• Q2 revenue is expected to decline low-single-digits, suggesting a sluggish holiday season.

Briefing.com Analyst Insight:

NKE’s Q1 results provided some much-needed reassurance that its “Win Now” turnaround is gaining momentum, especially in North America wholesale, where partners have embraced new product launches. Still, the company is far from a clean recovery story. Tariff headwinds, weak consumer demand in China, and the traffic declines in NIKE Digital underscore that structural challenges remain. Management’s cautious Q2 outlook -- calling for another revenue decline -- highlights that the holiday season is unlikely to be a breakout period. While we see early signs of progress, the stock’s near-term upside is capped by macro pressures and execution risk in China and digital. NKE likely needs to deliver a few more quarters of consistent improvement before investor sentiment truly turns in its favor.