Nike Plans More Job Cuts, Forecasts Steep Revenue Drop

Nike announced a new restructuring plan called "Pace" on Thursday, projecting a surprisingly steep drop in full-year revenue for fiscal 2027. The forecast underscores persistent challenges in China, where sales fell 26% on a constant-currency basis in the first quarter.

Shares dropped 8.5% in extended trading after the company missed first-quarter revenue estimates of $11.21 billion. CEO Elliott Hill acknowledged the performance business is not yet large enough to offset weakness in sportswear, Jordan Brand, and Greater China.

“Our Nike performance business is not yet large enough to offset the pressure we're seeing in Nike sportswear, Jordan brand, and Greater China.”

The restructuring includes job cuts starting in 2027, a shift from four geographic regions to three, and a new campus in Bengaluru, India. Nike expects the plan to deliver $2.5 billion in savings through fiscal 2031, mostly realized in fiscal years 2029 and 2030.

Analysts noted the forecast implies the lowest annual sales since the pandemic year of 2020. The stock is down over 40% this year, heading for a fifth straight annual loss and sitting roughly 75% below its 2021 peak.

Analyst Zach Warring stated the quarter looked like one expected from a new CEO three or four quarters in, not two years into Hill's tenure. Neil Saunders questioned why changes were not made sooner if the model was unfit.