Nike plans fresh job cuts and revamps operations as sales drop

Nike will cut staff and overhaul its global operations after posting falling quarterly sales and warning that revenue will drop by a high-single-digit percentage across fiscal 2027.

Shares fell as much as 6 per cent in extended trading following the announcement on Thursday, extending an annual decline of more than 40 per cent. The planned redundancies, set to begin in calendar year 2027, mark the company’s third round of layoffs announced this year.

Chief executive Elliott Hill, who took over nearly two years ago to steady a sputtering turnaround, told staff in an internal letter that operational changes would leave the business with fewer positions.

"This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty. I don't take that lightly," Hill wrote. The sportswear giant has not yet disclosed how many workers will lose their jobs.

What happened to Nike sales

Revenue for the fiscal first quarter dropped 4 per cent year on year to $11.21 billion, missing Wall Street expectations of roughly $11.32 billion to $11.33 billion. Net income slipped 2 per cent to $712 million, while diluted earnings per share came in at 48 cents.

The sharpest deterioration came in Greater China, where sales plummeted 26 per cent. Hill said the company was "moving with urgency" to address the drop, but acknowledged that weakness across key product lines was undermining progress elsewhere.

"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," Hill told analysts. He pointed to a "lack of energy in the lifestyle space" that was hurting customer traffic, with the core sportswear division falling by a low-double-digit percentage.

North America offered some stability, generating $5.13 billion in revenue to edge past estimates of $5.11 billion. Gross margin also rose 60 basis points to 42.8 per cent, aided by supply-chain shifts even as high discounting persisted across retail partners.

The restructuring plan

To stem the losses, Nike is rolling out a multi-year restructuring initiative dubbed "Pace". The programme aims to generate about $2.5 billion in cumulative cost savings through fiscal 2031, though it will carry a 15-cent charge per share against fiscal 2027 earnings.

Under the plan, Nike will reorganise its international structure into three regional units:

• The Americas
• Asia Pacific and Greater China
• Europe, the Middle East and Africa

The company also intends to build a new operational campus in India and modernise its supply chain network to accelerate product turnaround.

What happens next

For the full fiscal year 2027, Nike expects adjusted earnings per share between $1.15 and $1.35 alongside the high-single-digit sales contraction.

The report was the first under new chief financial officer Dave Denton, formerly of Pfizer, who faces the task of managing cash flows through prolonged consumer caution and geopolitical headwinds.

Pressure has mounted outside the balance sheet as well. Retail partner Dick's Sporting Goods warned in August that extensive discounting on slow-moving Nike goods was squeezing margins, while soccer star Kylian Mbappé ended his long association with Nike last month to join Swiss competitor On. Nike was also recently removed from the S&P 100 index after nearly two decades.