Nike announces new job cuts and forecasts revenue decline — Asharq Al-Awsat
Nike has announced a new stage of restructuring that includes job cuts and changes to the management model of its global business. The company also forecasts a high-single-digit percentage decline in revenue in fiscal 2027. Asharq Al-Awsat reports.
Nike has not yet specified the number of positions that will be eliminated. The company plans to begin notifying employees about the changes in 2027. The program, which continues previous rounds of cuts, is expected to deliver about $2.5 billion in savings by fiscal 2031. Most of the savings are expected in fiscal 2029 and 2030.
New regional division
As part of the reorganization, Nike is moving from four to three geographic regions: the Americas; Asia-Pacific and Greater China; and Europe, the Middle East and Africa. The company also plans to open a new campus in India, where it sees strong opportunities and access to talent.
Nike CEO Elliott Hill said the company’s sports business is not yet large enough to offset pressure on the Nike Sportswear, Jordan Brand and Greater China segments. According to him, restoring these businesses will take time. Nike is, in particular, deliberately reducing the number of launches of retro Jordan models.
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Deteriorating results in China
Nike’s sales in China fell 26% in constant currency in the first quarter. This was the ninth consecutive quarter of declining sales in the region, which accounts for about 15% of the company’s annual revenue and is its third-largest market after North America and the Europe, Middle East and Africa region.
Starting in January, Nike plans to stop granting online sales rights to some major retail partners in China in order to strengthen control over prices and distribution. Hill warned that changes to digital channels would last several seasons and would affect revenue and profitability in China in the short term.
In the first quarter ended August 31, Nike’s quarterly sales declined by about 4% to $11.21 billion, below analysts’ average estimate of $11.32 billion. At the same time, gross margin increased by 60 basis points to 42.8% due to lower warehousing and logistics costs. After the forecast was released, Nike shares fell 8.5% in after-hours trading.
