Nike Plans More Job Cuts as Turnaround Slows and Revenue Forecast Falls
Nike is expanding its restructuring program and preparing for more job cuts after warning that its sales decline will be significantly deeper than previously expected.
The sportswear giant said on October 1 that it will streamline its organization, reorganize global operations into three geographic regions and establish a new campus in India as part of a broader transformation called Pace. At the same time, Nike forecast that fiscal 2027 revenue will decline by a high-single-digit percentage, highlighting how difficult CEO Elliott Hill's turnaround remains.
Nike shares fell 8.5% in extended trading after the announcement, according to Reuters, as investors focused on the weaker outlook and the prospect that the recovery will take longer than expected.
Nike's Revenue Forecast Points to a Longer Recovery
Nike generated $11.21 billion in revenue during the fiscal 2027 first quarter ended August 31, down 4% from the year-earlier period and down 5% on a currency-neutral basis. Net income fell 2% to $712 million, while diluted earnings per share came in at $0.48.
The geographic performance explains much of the pressure.
Greater China revenue fell 22% on a reported basis and 26% on a currency-neutral basis. Europe, Middle East and Africa revenue declined 5%, while Asia Pacific and Latin America fell 2% on a reported basis.
North America was the main bright spot, with revenue rising 2% to $5.13 billion.
Nike's full-year outlook is considerably weaker than investors had hoped. The company now expects fiscal 2027 revenue to decline in the high-single-digit range. It also expects adjusted diluted EPS of $1.15 to $1.35, excluding about $0.15 per share of restructuring expenses related to Pace.
That combination is important because Nike is not simply dealing with temporary cost pressure. The company is attempting to rebuild demand for its products while simultaneously reducing its cost base.
More Job Cuts Are Part of Nike's Pace Plan
Nike has not disclosed a specific number of additional positions that will be eliminated under the new phase of restructuring.
The company said the operating-model changes will result in fewer roles, with decisions affecting employees beginning in calendar 2027 and continuing beyond that period.
Pace builds on Nike's previous cost-realignment program announced in March 2026.
The company expects the combined program to generate approximately $2.5 billion in cumulative savings through fiscal 2031. Those savings will come with about $1 billion of pre-tax charges, primarily related to employee costs, through fiscal 2031, in addition to approximately $300 million of severance costs recognized in fiscal 2026. Nike expects roughly another $300 million of charges in fiscal 2027.
For investors, the distinction between savings and charges matters.
Cost reductions can improve profitability over time, but restructuring itself can initially require significant cash spending. The bigger question is whether Nike can use those savings to invest more effectively in products, marketing and distribution rather than simply shrinking the business.
Why Nike Is Changing Its Global Structure
Nike plans to realign its operations around three geographic areas: Americas, Asia Pacific and Greater China, and Europe, Middle East and Africa.
The company says the objective is to become more agile and respond more closely to athletes and consumers in individual markets. It also plans to modernize its global supply chain and establish a new campus in India to support enterprise capabilities.
The geographic restructuring is particularly relevant to China.
Greater China has become one of Nike's biggest problem areas. Revenue dropped 26% on a currency-neutral basis in the latest quarter, with both footwear and apparel contributing to the decline. Nike's wholesale revenue in China fell 31% on a currency-neutral basis, while direct sales declined 18%.
Reuters reported that Nike plans to take back online sales rights from major Chinese retailers beginning in January, part of a broader attempt to regain control of its digital business in the market.
That strategy could create additional short-term pressure even if management believes it can improve the business over the longer term.
The Product Problem Is Still Central
Cost cutting alone cannot solve Nike's growth problem.
The company's first-quarter figures show that demand remains uneven across products and markets. Nike Brand footwear revenue declined 6% globally on a currency-neutral basis, while apparel revenue increased 2%. Converse revenue dropped 28%.
Nike Direct also remained weak. Direct revenue declined 9% on a currency-neutral basis, including a 13% decline in Nike Brand digital sales.
Reuters reported that the company has struggled with competition and a shortage of compelling new products, while increased promotions and discounts have also weighed on the business.
This is why the turnaround cannot be judged only by headcount reductions.
Nike ultimately needs products that attract consumers at full or relatively strong prices. If the company has to rely heavily on discounts to move inventory, revenue growth may remain under pressure and margins can suffer.
There Are Some Early Signs of Improvement
The latest quarter was not uniformly negative.
Nike's gross margin improved by 60 basis points to 42.8%, helped largely by lower warehousing and logistics costs. Selling and administrative expenses fell 3% to $3.9 billion, while operating overhead declined 6%.
North America also produced 2% revenue growth, supported by a 9% increase in wholesale sales.
These figures suggest that Nike's cost-control efforts are already producing some benefits in the income statement.
The challenge is scale. Improvements in margins and North America need to become large enough to offset continuing weakness in China, Europe and other parts of the portfolio.
What It Means for Nike Stock
The immediate market reaction shows that investors are focusing more on the pace of the recovery than on the headline cost savings.
An 8.5% after-hours decline indicates that the high-single-digit fiscal 2027 revenue forecast was viewed as a significant setback for expectations.
For shareholders, the key issue is whether Pace eventually creates a leaner and more responsive Nike without weakening the brand or reducing investment in innovation.
There is also a timing issue.
Nike expects the $2.5 billion of cumulative savings to build through fiscal 2031, meaning investors should not assume that the entire benefit will appear immediately. Meanwhile, the company expects revenue to decline sharply during fiscal 2027.
That creates a period in which Nike could be simultaneously cutting costs and trying to spend strategically to rebuild demand.
What Investors Should Watch Next
Several indicators will be particularly important over the next few quarters:
Greater China revenue, especially whether the 26% currency-neutral decline begins to moderate.
North American growth, including wholesale demand.
Nike Direct and digital sales.
Gross-margin trends and the effect of discounts.
New product launches, particularly in running and other priority sports.
Progress toward the $2.5 billion Pace savings target.
Restructuring charges and employee-related costs.
Inventory levels and product mix.
Whether revenue declines stabilize before fiscal 2028.
Nike ended the latest quarter with $8.4 billion in cash and short-term investments, while inventory stood at $7.8 billion, down 3% year over year.
That balance-sheet position gives the company room to continue investing through the turnaround, but the quality of that spending will matter as much as its size.
Conclusion
Nike is preparing for more job cuts and a major operating-model overhaul just as its sales recovery is losing momentum. The company expects high-single-digit revenue declines in fiscal 2027, while its new Pace restructuring program targets approximately $2.5 billion of cumulative savings through fiscal 2031.
The central issue for investors is therefore not simply whether Nike can reduce expenses. It is whether those savings can help fund a stronger product pipeline, improve execution and restore demand in markets such as China without sacrificing the brand's long-term positioning.
For now, the latest forecast suggests the turnaround still has a significant distance to cover. Investors will be watching revenue trends, product launches, margins and the pace of improvement in China as the next evidence of whether Pace is working.
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This article is for informational and educational purposes only and should not be considered investment advice.