Nike Has Posted 23 Consecutive Years of Increasing Dividend Payouts

Image Source: TradingView

By Brian Nelson, CFA

Nike (NKE) recently reported decent first quarter fiscal 2026 results with both revenue and GAAP earnings per share beating the consensus forecast. First quarter revenues of $11.7 billion were up 1% on a reported basis, but down 1% on a currency neutral basis. Nike Direct revenues fell 5% on a currency neutral basis, while wholesale revenues advanced 5% on a currency neutral basis. Revenues for the Nike brand were flat on a currency neutral basis in the quarter, while sales for Converse dropped 28% on a currency neutral basis. Its gross margin fell 320 basis points, to 42.2%, due to pricing pressure, higher discounts and channel mix, as well as higher tariffs, while diluted earnings per share came in at $0.49, a decline of 30%.

Management had the following to say about the results in the press release:

This quarter NIKE drove progress through our Win Now actions in our priority areas of North America, Wholesale, and Running. While we’re getting wins under our belt, we still have work ahead to get all sports, geographies, and channels on a similar path as we manage a dynamic operating environment. I’m confident that we have the right focus in Win Now and that our new alignment in the Sport Offense will be the key to maximizing NIKE, Inc.’s complete portfolio over the long-term.

I’m encouraged by the momentum we generated in the quarter, but progress will not be linear as dimensions of our business recover on different timelines. While we navigate several external headwinds, our teams are focused on executing against what we can control.

ESG Matters

“…we showed leadership across our Purpose focus areas. Through our commitments to equity, accessibility and sustainability, we created meaningful change and paved the way for future generations to be able to enjoy sport. Whether it’s getting more than one million kids active around the globe, spending a cumulative $1.4 billion with diverse suppliers or reducing 69% of GHG emissions since 2020 in our owned and operated facilities, we choose to act with confidence in the face of today’s most pressing challenges (Nike Impact Report).”

Nike has about 50% representation of women in the global corporate workforce and about 45% in leadership positions. It has about 40% representation of U.S. racial and ethnic minorities in its U.S. corporate workforce and about 35% representation at the director level and above. The company invests in Historically Black Colleges and Universities and Hispanic-Serving Institutions, and it boasts 100% pay equity across all employees on an annual basis. Its fiscal 2025 goals include a 10% waste reduction per unit in manufacturing, distribution centers and headquarters and 100% of waste diverted from landfill and incineration. Targets also include 25% reduction in freshwater usage per kg texting dyeing and finishing.

Concluding Thoughts 

During the first quarter of fiscal 2026, Nike returned $714 million to shareholders, consisting of dividends of $591 million, up 6% from the prior year, and share repurchases of $123 million. Nike has repurchased 124.4 million shares under its $18 billion program approved by the board in June 2022 for a total of approximately $12.1 billion. At the end of the quarter, inventories at Nike were $8.1 billion, down 2% compared to the prior year, while cash and short-term investments were $8.6 billion, down approximately $1.7 billion from last year. Nike continues to face pressure in its footwear division, though apparel sales were strong in the quarter. Footwear revenue fell 12% on a constant currency basis in China. Looking to the fiscal second quarter, revenues are expected to be down low single digits, while gross margins are expected to fall 300-375 basis points, including a net headwind of 175 basis points from tariffs.

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