Full Breakdown
Nike Expands Restructuring as China Sales Slump Deepens
By Drooid · · How we work
Core Event
Nike announced on October 1 that it will deepen its restructuring under CEO Elliott Hill, adding further job cuts and reorganizing its global divisions into three regions—Americas; Asia Pacific and Greater China; and EMEA. The plan follows a first-quarter revenue miss and a 26% constant-currency decline in China sales, the company’s third-largest market accounting for about 15% of annual revenue. Nike said the restructuring aims to generate roughly $2.5 billion in savings through fiscal 2031, with the bulk realized in fiscal 2029-30. The firm has not disclosed the number of roles to be eliminated and will begin employee notifications in 2027.
Sales Performance and Financial Metrics
- First-quarter revenue fell about 4% to $11.21 billion, below analysts’ average estimate of $11.32 billion (LSEG).
- Gross margin rose 60 basis points to 42.8% for the quarter ended August 31, helped by lower warehousing and logistics costs.
- China sales have declined for nine consecutive quarters, with the latest quarter showing a 26% drop on a constant-currency basis.
- North-American sales grew 2% on a constant-currency basis, driven by the performance business and World Cup-related demand.
- Nike expects revenue to decline in the high-single-digit range in fiscal 2027; analysts project an overall full-year revenue drop of about 2%.
Official Statements & Responses
Elliott Hill told investors that “our Nike performance business is not yet large enough to offset the pressure we’re seeing in Nike sportswear, Jordan brand, and Greater China,” and warned that the digital cleanup in China will take “multiple seasons,” likely hitting near-term revenue. Nike also indicated it will pull online sales rights from several major Chinese retail partners starting in January, a move intended to tighten pricing and distribution control.
Verbatim Quotes
- “Our Nike performance business is not yet large enough to offset the pressure we’re seeing in Nike sportswear, Jordan brand, and Greater China,” — Elliott Hill, restructuring under CEO
- “There is nothing inherently wrong with the (restructuring) plans, but they do suggest that Nike’s current model is not really fit for purpose, which in turn raises the question of why these changes were not made sooner,” — Neil Saunders, managing director of GlobalData