Nike Q1 Sales Miss UBS Estimates as Global Trends Weaken

Nike Inc. is bracing for a weaker first-quarter report as UBS lowered its price target by 13% to $42, signaling a departure from prior expectations. The brokerage projects that earnings per share for the quarter will fall short of consensus by five cents, with implied guidance for the second quarter ranging from $0.31 to $0.43 against a market expectation of $0.53. This downward revision reflects a broader assessment that Nike’s global sales trajectory has weakened over the past three months, challenging the company's recent momentum.

According to data cited by GN markets/earnings (en-US), UBS estimates that Nike’s direct-to-consumer sales in the United States declined by a mid-single-digit percentage in the first quarter. This performance contrasts sharply with consensus forecasts that anticipated a mere 0.4% decrease. The broker also identified pressure on direct-to-consumer sales in Europe, the Middle East, and Africa, alongside softening wholesale trends in Europe and continued weakness in China. These regional headwinds suggest that the company’s core growth engines are facing immediate demand-side constraints.

Promotional activity drives margin pressure

UBS pricing data indicates that Nike engaged in higher promotional activity in its direct-to-consumer channel during the first quarter compared to the same period last year. This increased reliance on discounts to stimulate demand likely contributed to the lower-than-expected sales growth rates. The shift in pricing strategy implies that the company is trading margin for volume in a competitive landscape, a move that could further compress profitability if not offset by other cost reductions or premium product launches.

Full-year outlook resets lower

The broker’s new earnings estimate for fiscal year 2027 stands at $1.30 per share, significantly below the buy-side consensus of approximately $1.55. UBS warns that management may reset expectations lower for the full year in the upcoming report, ahead of the November investor day. The price target cut is underpinned by a 13% reduction in the fiscal 2029 earnings estimate to $2.00 per share, which UBS values at 21 times earnings. This multiple suggests the market is pricing in sustained operational challenges rather than a temporary dip.

Neutral rating reflects peer-relative view

Despite the negative revisions, UBS maintained its neutral rating on Nike, expecting the company to perform in line with its peers over the next 12 months. The shares traded at $35.89, down 1% on Friday afternoon, indicating a market that has already partially absorbed the negative sentiment. The divergence between the lowered price target and the neutral stance highlights that while absolute earnings expectations have fallen, relative valuation remains consistent with the broader athletic footwear sector.