On Thursday, Nike (NYSE:NKE) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
The full earnings call is available at https://events.q4inc.com/attendee/387216736
Summary
Nike, Inc. reported Q1 fiscal 2027 revenue of $11.2 billion, a 4% decline on a reported basis, with significant pressure from Nike Sportswear, the Jordan Brand, and Greater China, despite strong performance in running, global football, and basketball.
The company is implementing strategic initiatives including PACE, aimed at improving operational efficiency and accelerating its sport offense, with expected savings of $2.5 billion and changes in its geographic organization to enhance local market focus.
Nike's future guidance for fiscal 2027 includes a revenue decline in the high single-digit range due to strategic adjustments in key segments, with EBIT projected to decline more than revenue, reflecting gross margin pressure and disciplined expense management.
Full Transcript
OPERATOR
Good afternoon everyone and welcome to Nike's first quarter fiscal 2027 conference call. For those who want to reference today's press release, you'll find it at investors.nike.com. Leading today's call is Paul Trussell, VP of Corporate Finance and Treasurer. I'd now like to turn the call over to Paul Trussell.
Paul Trussell, VP of Corporate Finance and Treasurer
Thank you, operator. Hello everyone and thank you for joining us today to discuss Nike's first quarter fiscal 2027 results. Joining us on today's call will be Nike President and CEO Elliott Hill and CFO Dave Denton. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially.
These risks and uncertainties are detailed in Nike's reports filed with the SEC. In addition, participants may discuss non-GAAP financial measures and non-public financial and statistical information. Please refer to Nike's earnings press release or Nike's website investors.nike.com for comparable GAAP measures and quantitative reconciliations. All growth comparisons on the call today are presented on a year-over-year basis and are currency-neutral unless otherwise noted.
We will start with prepared remarks and then open the call for questions. We would like to allow as many of you to ask questions as possible in our allotted time, so we'd appreciate you limiting your initial question to one. Thank you for your cooperation on this. I'll now turn the call over to Nike President and CEO Elliott Hill.
Elliott Hill, President and Chief Executive Officer
Before I begin, I want to welcome Dave Denton to Nike. Dave brings deep financial expertise, strong operational leadership and a proven track record of helping world-class companies grow. I'm excited to partner with him and the rest of our senior leadership team to serve consumers better, accelerate our profitability, create long-term value for shareholders. For the first quarter, results were in line with our expectations. Nike revenue was within the range we guided to, gross margin improved as we said it would, and we managed costs with discipline.
Importantly, the quarter showed the sport offense is driving results. Our Nike brand performance portfolio continued to grow. Last fiscal year we grew this business to $16 billion. We built on that foundation this quarter, growing Nike performance by another high single digits. Today I'll share more about the momentum we're seeing across our key sports. Despite that progress, our Nike performance business is not yet large enough to offset the pressure we're seeing in Nike Sportswear, Jordan Brand and Greater China.
We're taking deliberate actions to strengthen those businesses, but realizing the full benefit of those efforts will take time. On the call, I'll provide more detail on what we're doing and why. And finally, Dave and I will share how we're transforming Nike's operating model to scale the success of the sport offense across the company. This work has been underway for some time and it's an important part of building Nike the right way for the long term.
Let me start with Nike Sportswear, Jordan Brand and Greater China. We've identified the areas that need improvement and are actively repositioning these important businesses. Nike Sportswear, which accounted for just under half of this quarter's revenue, was down low double digits. The decline reflected a combination of deliberate actions, product underperformance and broader marketplace pressure. The first factor was one we expected. As planned, we reduced revenue from the Dunk by nearly 50% in the quarter.
That resulted in roughly a $200 million headwind in Sportswear. In addition, some aged higher-volume Sportswear footwear sold through below expectations. Looking ahead, that has impacted our future order books as we proactively work with our wholesale partners to work through excess inventory to create a healthy marketplace overall. There's a lack of energy in the lifestyle space right now, which is impacting traffic. Yes, the consumer is cautious, but as the leader in the industry, it's on us to bring more creativity to Sportswear.
The headline decline only tells part of the story. Within Sportswear, several major franchises are healthy and growing. The Air Force 1, one of the most important sneakers in the world, is now driving a stable full-price business through new dimensions and seasonal materials and colors. We also have a handful of Sportswear footwear franchises that have scaled over several seasons that grew by strong double digits in this quarter, led by our running-inspired silhouettes, the P6000 and the V5 Runner.
And where we have introduced newness at scale, we've seen early success. We launched Studio Fleece for women and Solo Fleece for men during back-to-school season. And the Studio Fleece was the best-performing apparel collection of the quarter in all of Nike. The common thread across these successful franchises is clarity. They know exactly who they are serving. That's the lesson. The Sportswear consumer isn't one audience. It's a collection of consumers with distinct needs, tastes and motivations.
So we're organizing Sportswear assortments the same way. We've organized our performance business around specific consumer insights and distinct style preferences. We're breaking down the Sportswear business into smaller areas of focus to create a more diverse product portfolio and a more differentiated marketplace. We'll see less of a sea of sameness that's hurting the lifestyle marketplace across our brands and our competitors right now. That's how we believe we'll move from managing a few successful Sportswear franchises to building a deep bench of winners across the entire marketplace.
With Jordan Brand footwear, we're going to get back to leading the scarcity model that we created. Simply put, we've been oversupplying our iconic retro product, asking them to do too much. And as we've done with the Air Jordan 1, we will deliberately reduce the volume and frequency of specific Jordan retro launches. We've discussed it with our wholesale partners. Together we will restore balance to the marketplace to create a foundation for more profitable and sustainable growth.
In the near term, North America will feel the biggest impact. To give you a better sense of the scale of these actions, in Q1, the Jordan Brand represented 13% of our global business, with revenue falling by mid teens. Here's why we're doing this. When consumers see the Jumpman, it should feel special, it should feel earned. And every decision we're making is designed to ensure the Jordan Brand remains as coveted a decade from now as it has been for the past several decades.
Let's turn to Greater China where for the quarter revenue declined 26%. With a new leadership team in place the past six months, we have been moving with urgency to alter the landscape and improve our position in the marketplace. As we announced in July, we are activating a plan to clean up the digital side of this market. We are eliminating distribution through channels that are not aligned with our marketplace strategy, which will decrease the deep discounting of our brands.
We will anchor Nike's and Jordan's digital marketplace in China around fewer, higher-quality experiences through the official Nike flagship storefronts on Tmall, JD and Douyin alongside Nike.com and the Nike app. We believe a tightened digital ecosystem of Nike flagships will enable a more premium brand presentation with clearer product stories and a more connected consumer journey. The focus will allow our top partners to concentrate on creating inspirational brick-and-mortar retail experiences.
The majority of our partners' physical doors in Greater China have not been refreshed in the past seven years. When we elevate retail experience and lead with sport, we see results. In Shanghai, our House of Innovation has delivered 10 consecutive months of growth since making that shift. In the near term, revenues and profitability in China will be impacted. We expect our digital cleanup to take multiple seasons as we continue to take targeted actions with our partners to improve inventory levels.
Taken together, Sportswear, Jordan Brand and Greater China represent significant work ahead but we know what healthy looks like and we're taking deliberate actions to get there. These challenges are significant, but they are not the whole story at Nike. At the same time, the sport offense is delivering measurable progress against our performance portfolio. Here's what that looked like this quarter. Running is up double digits again with consistent share gains.
Global football benefited from World Cup energy to drive strong double-digit growth in all four GEOs. Training grew globally led by EMEA. Basketball was up double digits in North America with expectation that the sport will continue its momentum in Q2. And both tennis and golf grew double digits. In Nike Running, our innovation in max cushioning helped reignite this business. Led by the strength of the Vomero franchise, we've nearly tripled our share of the max cushioning category over the past year. Now entering the next phase of Nike Running, over the past two months we've introduced four new footwear innovations — three in our racing silo and one in our Pegasus silo — each built around a different runner, a distance, and a goal. In August we launched the Pegasus Plus 2, a fast tempo training shoe with a curved Air Zoom unit for a quick, smooth ride.
In September we unveiled the AlphaFly 4, a lighter, more energy-giving version of our most celebrated marathon shoe. And yesterday we introduced two new shoes that span the spectrum of runners: the Swoosh Fly, our entry-level marathon racing shoe designed for the four-hour-plus runner, and Nike Apex, a super shoe with double-stacked Air Zoom units that deliver an incredible 40% more energy than the AlphaFly 3. In Global Football, we're pleased with our World Cup results, as we doubled our World Cup team kits sales compared to the 2022 tournament.
One of our strategies going into the tournament was to use the energy to invest in a much-needed refresh of the Global Football marketplace. This quarter, the newly elevated marketplace helped drive stronger sales in our club football kits, which was up high teens. That's critical because club football fans buy season after season. Training is one of Nike's largest untapped performance opportunities. Because every athlete trains, we're seeing success across the portfolio.
Nike Mind has quickly become one of our top-selling franchises. Nike Pro and Metcon are industry icons, and we just introduced the Nike Hybrid footwear system for both running and strength movements to serve the fast-growing world of hybrid training and racing. The new HyperSlide brings the next recovery innovation from our Nike x Hyperice partnership to a more accessible price point. In Basketball, where we are the global leaders, one of our most powerful growth opportunities is the women's game.
Nike Basketball has grown our women's signature business nearly 500% from FY22 to FY26. Today we activated the largest women's signature shoe launch in Nike's history, the Caitlin 1. It will launch in 5,000 doors — twice the average for a Nike Basketball signature shoe — supported by our largest Nike product campaign for the holiday season. What we've learned through the sport offense is that focus wins. When teams get closer to the athlete, the consumer, and the marketplace, they make better decisions.
And over the past year, we've taken steps to make certain that the rest of the company can move at the same speed. That's the thinking behind PACE, a program that brings several operational changes together under one effort. The purpose of PACE is clear: accelerate the sport offense. It will change how and where we work, move decisions and roles closer to the consumer, and build capabilities that will allow us to move faster. The sport offense is proving itself.
PACE is how we scale it. The first element is the work that's already underway to evolve our supply chain from a mostly fixed structure to one that is more flexible, responsive, and cost effective. As a next step, we're establishing a new campus in Bengaluru, India. Its mission is to drive new capabilities and ways of working for Nike. They will work closely with the teams around the world to run the business with greater speed and precision. These full-time Nike teammates will span across a number of functions across the company.
As part of PACE, we also plan to organize into three geographies: the Americas, which brings together North America and Latin America; APGC, which combines Asia Pacific and Greater China; and EMEA — Europe, Middle East, and Africa — will continue operating as it is today. We'll reduce layers and move more resources to the countries, territories, and cities, and give our local teams more ownership of winning in their markets. We expect teams to move into this new formation in fiscal year 28.
And the final part of PACE is enhancing the way we work across Nike, which will change the shape and size of our workforce. In some areas, we'll add capabilities to increase speed and scale; in others, we'll eliminate duplication. Over time, those changes will reduce the overall number of roles across Nike, Inc. As Dave will outline, we expect PACE to streamline decision making so we can capture demand faster, improve productivity, while also creating greater capacity to invest in what has always set Nike apart: serving athletes, creating industry-leading innovation, and building the world's strongest sports brands.
At our investor day in November, we will provide a clearer view of our long-term growth algorithm, the actions behind our portfolio priorities, and how our operating model will support sustainable growth and value creation. With that, I'll hand it over to Dave. Over to Elliott. A few weeks ago, the University of Texas hosted Ohio State in what many called the biggest game of the college football season. Most people will remember how Texas came back from a 20-point deficit against the number one team in the country. But what stood out to me wasn't the final score, it was how they got there: a series of methodical drives, a few calculated risks, extra effort in critical moments. They stayed committed to the plan and eventually the scoreboard caught up.
That resonates with me because as Dave and I just shared, we have a lot more work to do. That's just the reality we're in. Increasingly, I see signals that remind me why our strategy is right. That happened in Austin and it happened off the field. For six days leading into Saturday night, we helped turn the football game into a broader consumer moment. We activated every dimension of Nike, bringing together running, training, football, and sportswear.
We leveraged Blue Ribbon Elite, Nike's program for NIL athletes, and our retail partners to capture the attention of an entire campus. Students went for a Got It Run along Lady Bird Lake with our Aikens. They did yoga with our trainers on the South Lawn. They got a special invite to work out at the Texas Football weight room. They lined up at 5:30 a.m. to shop at our SKIMS pop-up on Speedway. They customized Studio Fleece and Solo Fleece designed specifically for Texas.
And we sold through the collection. We seeded custom Vapor Posite cleats with our top athletes. And we announced 13 new NIL athletes across eight sports. Even UT legend Kevin Durant showed up to welcome new athletes to join Team KD. This was Nike surrounding a moment, deploying our full sport offense—something no one else can do. It was the kind of focus on the ground game that helps us become more locally relevant. And when you have 1,000 partnerships like we do across universities in North America that reach over 13 million students, it's clear to me that Austin wasn't a destination.
It was a reminder of what's possible, of a larger opportunity in front of us, of what happens when Nike plays to our strengths. Now, one week in Austin doesn't change the work in front of us. We have a lot to prove, but it reinforced something special: the closer we get to the athlete, the closer we get to the consumer, the more opportunities we uncover to serve them. This is Nike using our partnerships in bigger, more creative ways. We can do it with Texas, Ohio State, and soon Miami in football; with the upcoming German Football Association partnership; or with FC Barcelona and Paris Saint-Germain in global football; at our major marathons; and at March Madness. That's how we create more value for athletes and fans, strengthen our brands, and that's how we expand the opportunities ahead for Nike and our shareholders. With that, Dave and I will now answer your questions.
OPERATOR
We will now begin the question-and-answer session. To ask a question, press star then the number one on your telephone keypad. We kindly ask that you please limit your initial question to one. Our first question comes from the line of Simeon Siegel with Guggenheim Securities. Please go ahead.
Simeon Siegel, Analyst at Guggenheim Securities
Thanks. Hey, guys. Good afternoon, Dave. Welcome. Looking forward to working with you. Elliott, any way to frame for us how large performance, sportswear, and Jordan are in the U.S.? Just trying to align the positive and negative comments with the fact that North America still grew revenues. And if I'm looking at it correctly, I think I saw first regional positive inflection, EBIT margin on dollars. So that would be helpful just in terms of sizing.
And then, Dave, just maybe higher level, curious if you can speak to your confidence in these numbers and your thoughts on how much you've been able to learn and touch in the short time you've been with the company. Thanks, guys.
Elliott Hill, President and Chief Executive Officer
Thank you. It's good to hear from you. Let me start first with performance. I'm going to start bigger picture. The sport offense is, in fact, working, and you can see it as our performance business continues to grow. It's a proof point. We believe that when you really get sharp on a distinct consumer segment, that's when we win. Performance delivered broad-based growth in Q1 across all key sports. We grew high single digits in Q1—performance did overall.
That was driven by football, running, training, basketball, tennis, and golf all contributing to performance growth. So it was across-the-board growth there. And so Q1 performance—and we said this in the remarks—growth in Q1 performance was on top of performance growing mid-single digits in FY26 to $16 billion in TBM. What I would say is innovation is truly driving that growth. I won't go through every one of them, but in running, training, golf—you go through it—innovation is what's driving the performance business.
But it's also not just about product. It's about how we line up what we call our sport offense: not just the sport, but how we execute at the country level across product, across marketing, across the marketplace. And you can see that. What we did in the World Cup, I was really proud of the work that the teams did there here in the United States and around the world. The Caitlin launch today has been incredibly successful. The Nike Hybrid launch that we did at the HYROX World Championships in Stockholm—those are proof points.
When we get performance, innovation, product, and the moment all lined up, we have great success. As it relates to North America, North America did grow 2% as we said, and it was driven by performance—led by running, global football, and basketball. Those were the drivers there. So overall, excited about the direction that we're headed from a performance perspective. And the last thing I'll say about North America: we are seeing good sell-through across all channels.
Whether it's sporting goods in North America—specifically whether it's sporting goods at a Dick's, an Academy, a Scheels; athletic specialty—JD, Foot Locker—performance product is selling; and then also at our specialty accounts. So overall, we're pleased with the sell-through of performance product in North America.
Dave Denton, Chief Financial Officer
Simeon, Dave here—really look forward to working with you. Maybe just a couple comments on guidance. First and foremost, you should understand that we've really performed, over the past several weeks, a bottoms-up comprehensive business plan review and a financial plan review, taking into consideration all the realities that we're seeing within our business across all the dimensions of our business and, importantly, the risks and opportunities and the actions that we're taking to manage this business and returning it to health over the long term.
Obviously I gave a range from an earnings perspective, and that just shows that we've pressure-tested a series of continued trends across the business and feel comfortable that this range reflects our best assessment of where this business stands today and the outlook. So I sit here today feeling very confident. The teams are focused against this, these financial measures are pushed into the business, and everybody's accountable for delivering against these results.
So this is our best estimate. I feel good about where we stand, and we're focused against delivering not only this year, but the years ahead of us.
OPERATOR
Our next question will come from the line of Brooke Roach with Goldman Sachs. Please go ahead.
Brooke Roach, Analyst at Goldman Sachs
Good afternoon, and thank you for taking our question. Elliott. Dave, I was hoping you could provide better context on the magnitude and cadence of pressure that you expect in Greater China relative to the 26% decline observed in Q1. Are there additional strategic actions that you think are still necessary to be taken on top of what's already been taken to improve the health of the China business beyond the reset of Nike Digital? Thank you.
Elliott Hill, President and Chief Executive Officer
Thanks, Brooke. We continue to execute a marketplace reset in China, and you saw that reflected in the numbers this quarter. The teams—and we here, working with the teams on the ground—are focused on becoming a more premium and culturally relevant brand. I'll start first, as I always do on this question: China does remain an incredibly important marketplace. This year marks our 45th year of doing business in China, and we remain committed to serving the Chinese consumer through sport.
And we know, Brooke, when we lead with sport, that's when we win. I can point to running this quarter. It continues to grow. We've lined up in China not only the innovative product, local experiences—which are critically important in China. Our After Dark Tour this quarter—we had almost 4,000 runners register, selling out in the first day. We are driving double-digit growth, and it's our sixth quarter of growth in running. So when we lead with sport and line up the experience and marketing, it does work.
We are aggressively cleaning up the marketplace, at the same time elevating the consumer experience. The digital marketplace, as you stated—we have taken some actions. It was too broad, it wasn't differentiated, and it had become promotional. So we did eliminate some online distribution that was unprofitable and brand-dilutive. We're anchoring, as we said in our prepared remarks, around some fewer flagships. At the same time, it's not just about digital.
We have to be elevating our physical retail, and we're investing with our partners in their must-win doors to create more, I would say, consistent and elevated experiences, because we know when we do that we've had some great successes. Our House of Innovation flagship—we're driving growth there. The last component of this is about being more local. So we will continue to invest in product creation teams on the ground in China and working on future seasons.
Our first collection coming out of China, Made for China, will launch in October. It'll be a brick-and-mortar-only launch, purposely. And then we will continue to deliver products over time—products and assortments that are locally designed, developed, and even manufactured in China. So we're excited about what the team's doing in China. I'm confident in Kathy and her team. It's just going to take us time resetting the marketplace, and we will continue to see pressure on revenue and profitability in the near term.
But again, confident in Kathy and the team.
Dave Denton, Chief Financial Officer
Hey, Brooke, this is Dave. Just real quickly, as Elliott said, we have multiple efforts underway in China to improve the performance of the marketplace and improve our performance within the marketplace. But from a specific guidance perspective, the guidance range that I just provided to you assumes that China actually gets worse from a revenue perspective for the balance of this year. And that's because of some of the actions we're taking today to make sure that we return this business to health in the long term.
So I think that's what you should expect from that business for the balance of fiscal '27.
OPERATOR
Our next question will come from the line of Jay Sole with UBS Securities. Please go ahead.
Jay Sole, Analyst at UBS
Great, thank you so much. Question is on Q2. I didn't think I heard full second-quarter guidance within the comment about the 400 basis point headwind. Maybe you can give us a little bit of help on how you're thinking about revenues for Q2, and then maybe on gross margin as well. And then even for the fiscal '27 outlook—I know you said SG&A down year over year, but you have sort of an unusual compare in fourth quarter. Give us a little bit of help on where you think the gross margin lands for fiscal '27.
Thank you.
Dave Denton, Chief Financial Officer
Yeah, thank you. This is David. Actually, we're probably not going to provide guidance specifically for gross margin for the year. But at this point in time there are puts and takes. I think one thing that's really constructive from a gross margin perspective is we're making fairly significant moves in our supply chain and sourcing programs today. That is actually bolstering gross margin. At the same time, we are taking discounts and resetting the marketplace, which is dampening gross margins over time.
So there's a little push and pull for this year as we go through the balance of fiscal 27. I will say as it relates to Q2, I just wanted to highlight because of the actions that occurred last year, we're up against a tough comparison with what happened in Cyber Week in Europe as well as what happened in the North America's sell-in last year, Q2. So if you look sequentially, quarter over quarter, you will see because of that comparison, growth rates being pressured in Q2.
So I hope that helps.
OPERATOR
Our next question will come from the line of Bob Durbal with BTIG. Please go ahead.
Bob Durbal, Analyst at BTIG
Hi, good afternoon and Dave, welcome.
Dave Denton, Chief Financial Officer
Thank you.
Bob Durbal, Analyst at BTIG
Elliott, I was wondering if you could spend some time, you know, a little bit more on... I'd love to hear the decision to let Mbappé go, you know, from your roster. But the other piece of this I'd love to hear more clarity on, you know, the game plan in basketball. Signature basketball. You've had some moving pieces there with Shay coming into Nike. So can you put some meat on the bone around some of that for us, please?
Elliott Hill, President and Chief Executive Officer
Yeah. Thank you, Bob. Just in terms of Mbappé, you know, we've had a relationship with him for over two decades and we've had some great moments together working together with him. And he was an important part of Nike Football. And what I would say is that we're proud of what we achieved together on and off the pitch and we wish him much success as he makes the move. And so again, we're happy for him and we are excited about what our portfolio has in Nike Football.
Great stable of athletes, great stable of federations and also countries. And I'm very proud of the work that our team has done around the football boots. So I'm excited about our opportunities in football. In terms of basketball, you'll see us continue to dimensionalize basketball, both men's and women's. We had a tremendous launch today with Caitlin, and Caitlin's just part of the women's business. Obviously, our women's business is up over 600% over the last few years.
So it's a new opportunity. We see the women's business helping us dimensionalize the overall basketball business between A'ja and Sabrina and now Caitlin. And so Caitlin was our largest, by the way, signature launch for women ever, at 5,000 doors. And great sell-through. In terms of Nike Basketball, you know, we also launched a Shai shoe today — Shai 2 — and good sell-through there. And we'll continue to lead basketball with some signature athletes.
But we also are excited about what we're seeing in our GT series as well. So overall, excited about where the team is headed in basketball and we're starting to see growth there. We even called it out: North America had growth in basketball again. So we see it as another growth opportunity from a performance perspective.
OPERATOR
Our next question will come from the line of Sam Poser with Williams Trading. Please, please go ahead.
Sam Poser, Analyst at Williams Trading
Thank you for taking my questions. I've got three. I'm just going to read them real quick. Can you give us what you expect — you talked about China, the regional expectation by geography for the year sort of relative to Q1, where you anticipate sales will trend to? You talk about PACE and the PACE project and increasing speed. You're now, I think, around 18 months to market. What are you trying to get that speed up to, like when you optimize it? And then in the family channel in your sub-core products, sub-$100 price point, does most of that product live in Sportswear?
Elliott Hill, President and Chief Executive Officer
Yeah, let me — I'll take. By the way, you broke all the rules, Sam. Got three questions in. I'll hit family and PACE. And in terms of family footwear, that channel of business, which is what we call core footwear here internally, Sam, it cuts across all performance sports. So we have an entry-level core product across running, across basketball, across training. And then of course we do have it in Sportswear. So it is a cross-sport, across Sportswear opportunity in that family-footwear channel.
And that's that, you know, $65 to $85 segment. And again, the teams continue to focus on that and are driving, I think, some really nice progress there. As it relates to PACE, we'll dive deeper in terms of the 18 months question at our Investor Day. But since you asked the question, I want to make sure I hit PACE for everybody on this call, so I might spend a bit more time — I'll go a little higher level. And that is that we are setting PACE up to help scale the success of the sport offense.
And I want to remind everybody the sport offense is creating product through the lens of sport, but it's paying it off at a country level. And so we're building an operating model that we need to get closer to the athlete, the consumer, and the marketplace. And we'll do that through some work that we're doing around our supply chain, which we went through in some detail — around a new capability center in India and moving from four to three geos: Americas, EMEA, and then Asia Pacific, Greater China — getting resources closer to the countries and then changing the size and shape of our workforce.
And so at a high level, that's the progress or the work that we're doing around PACE. And it will help us build a stronger Nike for the future and help support a more profitable and sustainable growth into the future. And we'll share more details at Investor Day.
Dave Denton, Chief Financial Officer
Yeah, and maybe I'll just touch on a couple things real quickly. One, on the PACE program, as Elliott said, this is a program that at the end of the day is working in tandem with the objective of creating operating profit leverage over time. And so this will be an important program and leverage and initiative to be able to do that. Secondly, we're not going to give guidance, obviously, by region, but as I said earlier, the actions that we're taking in China will further dampen China compared to Q1 from a growth perspective for the balance of this year.
OPERATOR
Our next question will come from the line of Alex Stratton with Morgan Stanley. Please go ahead.
Alex Stratton, Analyst at Morgan Stanley
Perfect. Thanks so much for taking the question. Maybe just a big-picture one for you, Elliott. If we just go back a couple years when you first started, I feel like we knew what the main — or we were having a better understanding of what the main pressure points were with Jordan, with China, with Sportswear — things haven't entirely moved that much. They've gotten a little bit worse in some of those areas. So can you just walk through maybe what you underappreciated about some of the challenges there at that time, and then what gives you confidence that some of the revised strategies you outlined today are the right ones?
Thanks so much.
Elliott Hill, President and Chief Executive Officer
Yeah, thanks, Alex. What I would say is since I returned, I believe strongly that we have strengthened the foundation of our business and our direction is super clear that we're building Nike the right way and we're building Nike for the long term. And I would characterize our comeback as ongoing — at our size and scale, meaningful change takes time. Our turnaround is happening one sport, one sport community, one city, one country at a time. And we are reallocating resources against our biggest opportunities.
So we're building for the long term. I would say that we started with the areas that mattered most, focusing on our culture, getting this company focused back on sport innovation. We started with running and you see now that momentum through our performance business. We thought it was critically important to re-anchor this company in sport. We reignited our marketing efforts. We started serving consumers across an entire marketplace, rebuilding our wholesale partnerships and organizing against the sport offense.
And so we understand that we still have work to do in Sportswear, Jordan, and Greater China. And again, from a Sportswear perspective, what we are going to do is break this big business called Sportswear — and I think this is one thing that I probably did underappreciate — breaking it down into segments focused on a distinct consumer, which will allow us to have greater clarity around the products, the stories, and the retail experiences for those consumers.
In terms of Jordan, we're repositioning the Jordan Brand, restoring the scarcity model for retro styles, and you will see us dimensionalize the brand through sports. And we're already seeing some success and growth in our football — or, excuse me, our cleated business — our golf business, our training business. And then in terms of China, we're leading with sport and innovation — I've talked a lot about that — and we're taking some really decisive actions in the marketplace, in that we build a healthier business over time.
So we look forward to sharing what comes next for each of those businesses at Investor Day.
OPERATOR
Our next question will come from the line of Matthew Boss with JP Morgan. Please go ahead.
Matthew Boss, Analyst at JP Morgan
Great, thanks. So, Elliott, could you elaborate on the level of potential pain before gain? It seems like that's a key theme here that you're laying out today. What segments of the business may further moderate tied to the strategic actions that you noted would impact the business for the balance of this year and into early fiscal 28? And just on PACE, would it be fiscal 29 where we could expect this transformation work to bear fruit at a P&L level?
Dave Denton, Chief Financial Officer
So maybe this is... Dave — maybe I'll start first. I think as we indicated, those three areas — whether they be Sportswear, Jordan, and China — we're taking deliberate actions in those areas to improve performance for the long term, and that's going to dampen performance now. So yes, we're going to experience some, as you describe it, some additional pain. But I think that — and that's going to be through the balance of this year and probably bleed in a little bit into fiscal 28 as well.
But that's all in the goal of returning these businesses to health and driving really outsized shareholder value creation over time, number one. Secondly, as it relates to PACE, we are beginning to see savings now, even through Q1. Some of the actions that we took as it related to supply chain are bearing fruit in gross margin. So you're beginning to see some improvement in P&L today from PACE, but clearly the savings are going to ramp over time starting now, with the maximum savings to be appreciated and accrued in 29 and 30.
OPERATOR
Our final question will come from the line of Michael Benetti with Evercore ISI, please go ahead.
Michael Benetti, Analyst at Evercore ISI
Hey guys, thanks for taking our question. Let me add my welcome. Dave, it's nice to work with you. I just want to ask another way on China. You mentioned that it's going to take multiple seasons to reset it to health. And you mentioned, you know, revenue pressure a couple times will bleed into fiscal 28 — I'm assuming, you know, maybe there's a connection there. If you could just talk to us about what you mean when you frame China in multiple seasons and if you see a path to total company revenue positivity at some point in fiscal 28.
And then, Dave, you did mention the dividend. And as we take kind of an initial pass at the cash model, it sounds like you're alluding to some ongoing top line challenges here for a little bit. On the guidance midpoint today, I think the dividend ratio is over 100%. So just given the investment needs in the business, talk to us about the priority there for the dividend.
Dave Denton, Chief Financial Officer
Yeah, first and foremost, let me hit that right out the gate. Dividend is a very significant priority for us here at Nike. It is a significant priority from the capital allocation program. And under all scenarios, we have support for maintaining and ultimately growing the dividend over time. So just we can put that to bed with that statement. Secondly, I look forward to spending some time with you in November because in November we're going to give you a financial algorithm so you can begin to assess what not just 27 looks like, but what does the next five years begin to look like both from a top line and a bottom line perspective.
So why don't we hold that question. We'll come back to it at Investor Day and we'll hit that head on.
OPERATOR
And that will conclude the question and answer session and our call today. Thank you all for joining. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
Login to comment