NKE · NIKE, Inc.
10-Q filed 2026-10-02 period 2026-08-31
60 Stable
confidence high · source filing on SEC.gov ↗
- NIKE launched the 'Pace' program, a multi-year enterprise restructuring plan expected to incur $1.0 billion in pre-tax charges through fiscal 2031 while targeting $2.5 billion in cumulative savings.
- Revenues declined 4% (5% currency-neutral) to $11.2 billion, driven by a 22% drop in Greater China and a 28% drop in Converse, reflecting severe promotional pressures and declining traffic.
- Operating cash flow fell to $135 million from $222 million in the prior year period, leading to negative free cash flow of -$64 million due to working capital outflows and inventory growth.
vs. prior filing (10-K filed 2026-07-15) — ⚠ ALERT
FHS 70 → 60 (-10) · Stable -> Stable
Profitability -13Balance sheet +8Cash generation -30Risk flags -5Mgmt signal -10
Filing Health Score pillars
Profitability 25%
55
Revenue declined 4% (5% currency-neutral) to $11.2 billion due to lower sales in Greater China and Converse, though gross margin expanded 60 basis points to 42.8% due to lower logistics costs (Results of Operations).
Balance sheet 20%
80
The current ratio is strong at 2.07, and cash and equivalents of $6,903 million (plus $1,465 million in short-term investments) compare favorably to total debt of $7,893 million (Balance Sheets).
Cash generation 20%
45
Operating cash flow of $135 million was significantly below net income of $712 million, resulting in negative free cash flow of -$64 million after $199 million in capital expenditures (Statements of Cash Flows).
Risk flags 20%
70
No going-concern or restatement issues are present, but risks are elevated by a $1.0 billion restructuring charge for the Pace program and inventory growth of 5% (Note 12, Balance Sheets).
Mgmt signal 15%
50
Management signals a prolonged turnaround with strategic resets for Converse and Greater China extending beyond fiscal 2027, alongside a major organizational restructuring into three geographies by fiscal 2028 (Recent Developments).
Key metrics (Three months ended August 31, 2026)
period: Three months ended August 31, 2026
operating cash flow: $135 million
total debt: $7,893 million
revenue: $11,213 million
cash and equivalents: $6,903 million
shares outstanding: 1,484.2 million
net income: $712 million
Gemma triage notes (pre-analysis, second opinion)
risk_factors
Here’s a terse bullet-point analysis of the SEC filing, focusing on key risks and changes: * **Overall Tone:** Cautious, acknowledging significant challenges and strategic shifts. * **Going Concern:** Implicitly flagged by declining revenues, discounting pressures, and the need for extended strategic resets. * **Restatement:** Not indicated, but the detailed analysis suggests a significant shift in strategy. * **Litigation:** Not explicitly mentioned, but the complex restructuring and inventory issues could potentially lead to disputes. * **Customer Concentration:** High, particularly in Greater China, evidenced by declining store traffic and promotional activity. * **Control Weaknesses:** The need for extensive restructuring (Pace program) and multiple strategic resets indicates potential operational inefficiencies. * **Inventory Issues:** Significant excess inventory, driving markdowns and returns, a core problem. * **Marketplace Pressure:** Increased discounting across NIKE Direct and wholesale channels. * **Converse Strategic Reset:** Ongoing challenges with the Converse brand impacting overall profitability. * **Pace Program:** A multi-year cost realignment plan with substantial pre-tax charges ($1B + $0.3B severance). * **Geographic Restructuring:** Planned shift to three geographic operating segments (Americas, APGC, EMEA) by fiscal 2028. * **Revenue Decline:** Reported a 4% decrease in total revenues (currency-neutral). * **Long-Term Actions:** Several key initiatives (product innovation, brand building) are expected to take beyond fiscal 2027.
Automated research summaries derived from SEC filings. Not investment advice.