On October 2, Nike dropped 8.19% overnight to $32.10/share following the release of its fiscal Q1 results after market close. The decline was driven by a revenue miss and significantly below-consensus full-year earnings guidance, compounded by a new restructuring plan involving layoffs.

Nike posted fiscal Q1 revenue of $11.21 billion, down 4% year-over-year and below the consensus estimate of $11.33 billion. Diluted EPS came in at $0.48, slightly beating the $0.44 estimate but down from $0.49 a year ago. Nike Brand revenue fell to $10.95 billion versus the $11.04 billion consensus, while Converse revenue of $263 million also missed the $289.7 million expectation. Gross margin improved modestly to 42.8% from 42.2%.

The larger shock came from forward guidance: Nike projected fiscal 2027 revenue to decline by high-single digits and adjusted EPS of $1.15 to $1.35, far below the analyst consensus of $1.68. The company simultaneously launched the PACE restructuring initiative targeting $2.5 billion in savings by fiscal 2031, which includes layoffs, supply chain modernization, and a reorganization into three geographic regions. China sales have now declined for nine consecutive quarters. Short interest had already surged to a record 87 million shares prior to the report, reflecting extreme bearish sentiment.

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