Nike is preparing additional workforce reductions and a sweeping operational overhaul after quarterly revenue fell 4%, Greater China sales dropped 22% and the sportswear company forecast a high-single-digit decline in revenue for fiscal 2027.
By yourNEWS Media Newsroom
Nike is preparing another round of job cuts as part of a multiyear restructuring designed to simplify its global operations, reduce costs and address persistent weakness in China after the sportswear company issued a disappointing sales outlook for fiscal 2027.
The company unveiled the restructuring program, called “Pace,” alongside its fiscal first-quarter results Thursday. Nike plans to reduce its four geographic operating divisions to three, modernize its global supply chain, establish a new corporate campus in India and eliminate additional positions beginning in calendar 2027.
CEO Elliott Hill told employees that the company had not yet determined every position that would be affected and acknowledged the uncertainty created by another round of reductions.
“This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty,” Hill said in a company-wide message. “I don’t take that lightly.”
Nike did not disclose how many jobs ultimately will be eliminated. The company expects the restructuring to continue beyond 2027 as it reorganizes functions and shifts resources toward areas management believes can restore sustainable growth.
The company said Pace is intended to expand the operating model behind its “Sport Offense” strategy, which organizes teams more closely around individual sports while reducing organizational complexity. Nike expects the program to generate approximately $2.5 billion in cumulative savings through fiscal 2031.
The restructuring is expected to produce approximately $1 billion in pretax charges through fiscal 2031, primarily involving employee-related costs. That is in addition to approximately $300 million in severance expenses recognized during fiscal 2026. Nike expects about $300 million of the new Pace-related charges to be recorded during fiscal 2027.
Under the new geographic structure, Nike will combine North America and Latin America into a single Americas division. Asia Pacific and Greater China will also be merged, while Europe, the Middle East and Africa will remain together as EMEA.
The company additionally plans to establish a major campus in Bengaluru, India, supporting Nike, Jordan Brand and broader global operations. The move expands a strategy Nike had already been pursuing to concentrate technology and operational capabilities in larger hubs.
The restructuring comes as the company’s turnaround continues to encounter difficulty in several of its most important businesses.
Nike reported first-quarter revenue of $11.21 billion for the three months ending Aug. 31, down 4% from $11.72 billion a year earlier. On a currency-neutral basis, revenue declined 5%. Net income fell 2% to $712 million from $727 million, while diluted earnings were 48 cents per share.
Gross margin provided one of the quarter’s brighter results, improving 60 basis points to 42.8%, primarily because of lower warehousing and logistics expenses. Selling and administrative expenses declined 3% to $3.91 billion as lower operating overhead more than offset higher spending on marketing.
Hill said the company had made progress in portions of its performance business but acknowledged substantial work remains.
“The Sport Offense is driving measurable progress across our performance business, and we introduced Pace to help us accelerate and scale that momentum across NIKE,” Hill said. “We have more work to do in NIKE Sportswear, Jordan Brand and Greater China, and we’re taking deliberate actions to strengthen those businesses the right way for the long-term.”
Greater China remained Nike’s most significant regional problem.
Revenue there fell 22% from a year earlier to $1.18 billion. On a currency-neutral basis, the decline was 26%, marking the ninth consecutive quarter of falling sales in a market that historically has been one of Nike’s major sources of growth and profitability.
China wholesale revenue dropped 28% on a reported basis to $644 million and 31% on a currency-neutral basis. Nike Direct revenue in the market declined 13% to $536 million, or 18% when currency effects were excluded. Footwear revenue fell 22%, apparel dropped 23% and equipment declined 15%.
Nike has faced intensifying competition in China from domestic sportswear companies along with weaker consumer demand and heavy discounting. The company is now taking a more aggressive approach to controlling where and how its products are sold.
Beginning in January 2027, Nike plans to revoke online selling authorization from several major Chinese retail partners as it attempts to reduce discounting and direct more consumers toward Nike-controlled digital channels and branded stores.
“We are eliminating distribution through channels that are not aligned with our marketplace strategy, which will decrease the deep discounting of our brands,” Hill said during Thursday’s earnings call.
The decision is expected to put additional pressure on Chinese sales before management expects the market to stabilize.
“In the near term, revenues and profitability in China will be impacted,” Hill said, adding that cleaning up the company’s digital marketplace would require multiple seasons.
North America was the only one of Nike’s four existing geographic regions to record year-over-year revenue growth during the quarter, with sales increasing approximately 2%.
The performance of Nike’s direct-to-consumer business was considerably weaker. Nike Direct revenue declined 8% to $4.14 billion, including a 13% drop in Nike Brand Digital sales and a 5% decrease at Nike-owned stores. Wholesale revenue held up better, falling 1% to $6.8 billion.
Converse, which Nike owns, also remained under significant pressure. Revenue dropped 28% to $263 million, with declines across all geographic territories.
The latest restructuring extends a series of workforce reductions as Hill tries to reverse several years of deteriorating sales trends and lost market share.
In January, Nike eliminated approximately 775 U.S. positions, primarily at distribution centers in Tennessee and Mississippi, as it sought to increase automation and streamline warehouse operations. The company said those changes were intended to reduce complexity, improve flexibility and support a return to profitable growth.
Nike followed with another approximately 1,400 job cuts in April, representing slightly less than 2% of its global workforce. Those reductions primarily affected global operations and technology functions across North America, Asia and Europe.
The April changes were also designed to concentrate more technology operations around Nike’s headquarters in Beaverton, Oregon, and its India technology operations while integrating supply-chain functions spanning materials, footwear and apparel.
Those rounds followed earlier cuts under both Hill and his predecessor as Nike attempted to correct excess inventory, reduce operating expenses and reverse a strategy that had reduced the company’s dependence on traditional wholesale retailers.
Hill, who returned to Nike as chief executive in October 2024 after spending decades at the company earlier in his career, has sought to rebuild relationships with retail partners while refocusing Nike on performance sports such as running, basketball, soccer and training.
The turnaround has produced some successful products, but management continues to contend with heavy discounting, aging lifestyle footwear franchises and increased competition from brands including On, Hoka and Anta.
Nike’s first-quarter results suggest those problems have not yet been resolved. The company now expects revenue for the full 2027 fiscal year to decline by a high-single-digit percentage. Adjusted diluted earnings are projected at $1.15 to $1.35 per share, excluding approximately 15 cents per share in fiscal 2027 restructuring expenses associated with Pace.
Nike’s $7.8 billion in inventories at the end of August was 3% below the prior year, reflecting changes in product mix. Cash, equivalents and short-term investments totaled $8.4 billion, approximately $200 million below the previous year.
The company is attempting to balance its cost reductions against continued investment in products and marketing. Demand-creation spending rose 5% during the first quarter to $1.25 billion, largely because Nike increased marketing around major sporting events, while operating overhead declined 6% to $2.66 billion.
Hill’s challenge is now to turn the operational savings into stronger products and healthier sales rather than rely primarily on cost cutting. Reuters reported that Nike’s ongoing struggles in China and its weaker revenue forecast have increased investor scrutiny of a turnaround that has already included multiple restructurings and layoffs.
Pace represents the company’s most extensive attempt yet to reshape the organization around that recovery. The program will reduce management layers and positions, reorganize Nike’s geographic structure, expand capabilities in India and overhaul portions of the global supply chain.
The financial benefits, however, are expected to accumulate over several years rather than immediately.
That leaves Nike entering the remainder of fiscal 2027 with another round of job reductions ahead, declining global revenue, continued weakness in its direct business and a China operation that management says will deteriorate further in the near term as the company removes discounted distribution and attempts to rebuild the brand on more controlled terms.
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