Nike is planning a fresh round of job cuts following a sharp fall in sales in China and a weaker-than-expected first quarter.
The company confirmed that it would restructure its global operations and reduce roles from 2027, although it has not yet disclosed how many jobs will be affected. The changes are expected to generate around £1.9bn in savings by fiscal 2031.
Nike said forecasted revenue would fall by a high-single-digit percentage during its 2027 financial year, significantly steeper than the roughly two per cent decline analysts had expected.
Shares in Nike dropped 8.5 per cent in extended trading following the update.
Nike’s first-quarter sales fell around four per cent to $11.21bn, missing analyst expectations of $11.32bn, as continued weakness in China weighed on its performance.
Sales in Greater China plunged 26 per cent on a constant-currency basis during the quarter, marking the ninth consecutive quarter of declining sales in the market. China accounts for around 15 per cent of Nike’s annual revenue and remains its third-largest market.
The brand has been battling growing competition from both international sportswear rivals and domestic Chinese brands, while analysts have raised concerns over a lack of new products capable of driving demand.
Nike chief executive Elliott Hill said its performance-focused business was not yet large enough to offset weaker trading across its sportswear, Jordan and Greater China divisions.
It is also cutting back the number of Jordan retro launches as part of efforts to reduce discounting and restore demand for the brand.
Nike is separately preparing to remove online sales rights from some major wholesale partners in China from January in an attempt to gain greater control over pricing and distribution.
However, Hill warned that the reset would take “multiple seasons” and put further pressure on sales and profitability in the market in the short term.
Nike is also simplifying its global structure, moving from four operating regions to three: the Americas; Asia Pacific and Greater China; and Europe, Middle East and Africa.
It will also open a new campus in India as part of the shake-up.
There were some signs of improvement elsewhere, with North American sales rising two per cent on a constant-currency basis during the quarter, supported by growth in Nike’s performance ranges.
Gross margin also increased 60 basis points to 42.8 per cent, helped by lower warehousing and logistics costs.
Nike has been attempting to revive growth under Hill by putting a renewed focus on sports including running and rebuilding its relationships with wholesale partners after previously prioritising its direct-to-consumer business.
Hill said the company would begin providing updated targets through the financial year from November as the restructuring progresses.
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