Nike launches a new wave of cutbacks after worsening sales forecast

Nike is preparing new job cuts and a restructuring of its global business structure after another decline in sales. The company also downgraded its forecast for the current fiscal year and expects revenue to decline by a high single-digit percentage.

The new measures will be part of the Pace program, which Nike announced along with its quarterly results. The company expects the restructuring to save approximately $2.5 billion by the end of fiscal 2031.

The program involves simplifying the organizational structure, modernizing the global supply chain, creating a new corporate center in India, and reducing the number of geographic business regions from four to three.

As reported by Financial Times, the changes will also mean a reduction in Nike's workforce, which currently numbers about 73,000 employees. The company has not yet announced how many positions will be eliminated and in which countries.

Nike stated that the implementation of Pace will require about $1 billion in expenses through 2031, a significant portion of which will be related to personnel. The company has already recognized an additional approximately $300 million in severance costs in fiscal 2026.

The new wave of savings coincides with deteriorating operating performance. In the first quarter of fiscal 2027, Nike's revenue decreased by 4% to $11.2 billion, and excluding currency fluctuations, the decline was 5%. Net profit fell by 2% to $712 million.

The biggest problems remain in China. Nike's sales in the Greater China region fell by 22% to $1.18 billion in the quarter. Wholesale sales decreased by 28%, while revenue through Nike Direct channels fell by 13%.

The company also continues to lose sales in its own digital channels: global Nike Digital revenue declined by 13%. At the same time, management reports progress in sports categories and in the North American market.

For the full fiscal 2027, Nike now forecasts a high single-digit percentage decline in revenue. Adjusted earnings per share are expected in the range of $1.15-1.35, excluding restructuring costs.

For the company, this is a continuation of the large-scale restructuring being carried out by CEO Elliott Hill. Management identifies Nike Sportswear, Jordan Brand, and China as the main problem areas.

Previously, Kurs Ukraine wrote that Wall Street analysts' sentiment toward Nike stock had deteriorated to its lowest level in at least 25 years. Weak sales in China and doubts about the speed of business recovery were cited among the main reasons.

Based on materials from: Nike Investor Relations, Financial Times