Full Breakdown
Nike’s Turnaround Struggles Deepen as New Job Cuts and China Weakness Persist
By Drooid · · How we work
Core Event: Fresh Restructuring and a Bleaker Outlook
Nike announced another round of job cuts that will begin notifying employees in 2027, though the exact headcount reduction remains undisclosed. The company also projected revenue to decline in the high-single-digit range for fiscal 2027 and warned that most cost-saving benefits from the overhaul will not materialize until fiscal 2029-2030. Sales in the sportswear, Jordan brand and Greater China segments—together accounting for more than half of total revenue—continue to lag, prompting a revised earnings forecast for the fiscal year ending May 2028.
Background & Context
Elliott Hill returned in October 2024 to address product missteps and strained wholesale ties. He refocused development on core sports, revived the performance business and consolidated Nike’s geographic structure from four regions to three. Earlier layoffs in 2026 laid the groundwork for the current restructuring, which is expected to generate roughly $2.5 billion in savings through fiscal 2031.
Data & Statistics
- Market value has more than halved since Hill’s return; shares were down about 8 % at $32.22, near a 12-year low.
- First-quarter revenue fell 4 % to $11.21 billion, missing the consensus estimate of $11.32 billion.
- Gross margin rose 60 basis points to 42.8 % for the quarter ended August 31, helped by lower warehousing and logistics costs.
- China sales dropped 26 % on a constant-currency basis in Q1 and have declined for nine consecutive quarters, representing roughly 15 % of Nike’s annual revenue.
- North America posted a 2 % constant-currency increase, buoyed by the performance business and the World Cup.
- The restructuring plan targets $2.5 billion in savings through fiscal 2031, with the bulk realized in fiscal 2029-2030.
Official Statements & Responses
Hill noted that the company will pull online sales rights from several major Chinese retail partners starting in January, a move intended to tighten pricing and distribution control, even though it will hurt near-term revenue in the region.
Verbatim Quotes
- “Nike really needs to show that it can at least bail out problems faster than taking them on,” — Neil Saunders, GlobalData
- “With the November analyst day ahead, we would assume management likely preferred to get the 'bad news' out of the way to offer up a more positive tone in person, but clearly there has been plenty of 'bad news' to spare,” — Simeon Siegel, Guggenheim
- “Simply put we've been oversupplying our iconic retro product, asking them to do too much,” — Elliott Hill, CEO of Nike
- “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, CEO of Nike
What’s Next
Nike’s investor day is scheduled for November 16-17, where the company is expected to provide a clearer roadmap for restoring growth and profitability and to update its financial targets for the current fiscal year. Analysts will focus on milestones for the China restructuring, the pace of Jordan retro launch reductions, and the timeline for achieving the projected cost savings.