Nike faces falling sales, job cuts, and a struggle to revive growth
text_fields
Nike is cutting jobs, reorganising its global business and warning of another sharp fall in sales as it works to address challenges that have built up over several years.
Nike’s revenue fell 4% to $11.2 billion in the quarter ended August 31, while profit declined 2% to $712 million.
The company expects fiscal 2027 revenue to fall by a high-single-digit percentage.
Nike shares fell as much as 8.5% in extended trading following the results.
The company’s market capitalisation has fallen by about $230 billion from its peak.
Nike’s difficulties are not linked to a collapse in demand for sportswear, but to challenges in developing products that consumers want to buy. Its performance businesses, including running, are showing progress, while its lifestyle business remains under pressure. Nike Sportswear and Jordan Brand have struggled, while Converse revenue fell 28% in the latest quarter.
The company is also facing a difficult market in China.
Greater China revenue fell 22%, or 26% on a currency-neutral basis. Nike plans to tighten control over online sales in China from January and reduce reliance on some third-party digital channels.
Its direct-to-consumer strategy is also being adjusted. Nike Direct sales fell 8% in the latest quarter, with digital sales declining 13%, while North American wholesale sales grew 2%.
Nike is launching an operating transformation called Pace, involving supply-chain changes, a new organisational structure, fewer geographic divisions and workforce reductions.
The company expects about $2.5 billion in cumulative savings through fiscal 2031, against around $1 billion in pre-tax restructuring charges. Affected job decisions are expected to begin in 2027, though Nike has not specified the final number of cuts.
The company also plans to establish a new campus in Bengaluru to support Nike, Jordan Brand and Converse.
Nike’s gross margin improved to 42.8%, while inventory fell 3% year-on-year to $7.8 billion. However, weak sales in China, lifestyle products, Jordan, and Converse continue to weigh on its recovery.