Nike Inc. is undertaking a major restructuring, cutting jobs and revising its strategy to address deteriorating results as it faces increasing pressure from Wall Street and consumers. The company announced a plan expected to save $2.5 billion over the next five years, following weaker-than-expected sales and a disappointing fiscal outlook.
Chief Executive Officer Elliott Hill, who is beginning his third year in charge, faces scrutiny as sales continue to decline, particularly in China. Analysts predict a high-single-digit revenue decline for this fiscal year, a marked drop from earlier projections.
In response, Nike will consolidate its geographic divisions to better serve local markets and expedite product development. Significant changes include merging Greater China with the Asia Pacific region and combining Latin America with North America. Hill also indicated that fewer roles will be needed over time, with decisions on affected positions starting in 2027.
Nike’s revenue for the latest quarter was $11.2 billion, reflecting a 4% year-over-year decline, missing analyst expectations. Both direct-to-consumer and footwear sales fell short, and Converse continues to struggle with 14 consecutive quarters of declining sales.
Looking ahead, CFO Dave Denton mentioned that Nike anticipates further challenges in China, prompting the company to pull back on promotions and third-party sales. Sales in sportswear dropped significantly, impacting overall revenue. To address lagging performance in the Jordan brand, Nike plans to reduce the volume and frequency of product launches to create scarcity and boost demand.
Detailed plans about the restructuring and future outlook are expected to be shared at an investor day next month.
