Nike Layoffs Coming as Earnings Miss Deepens Turnaround Woes

Nike shares fell nearly nine percent in after-hours trading on Thursday after the sportswear giant reported a fiscal first-quarter revenue miss and warned that full-year sales would fall much more steeply than expected. The company also unveiled a new restructuring program, under which more Nike layoffs are planned.

For the quarter covering June through August, Nike reported revenue of $11.2 billion, down four percent from a year earlier and five percent on a currency-neutral basis, according to the company's earnings release. Net income slipped two percent to $712 million, while diluted earnings per share came in at $0.48. Gross margin improved sixty basis points to 42.8 percent, the one bright spot in the report.

The regional breakdown showed why investors are worried. North America revenue rose two percent to $5.127 billion, but Europe, the Middle East and Africa fell five percent to $3.176 billion, and Greater China dropped 26 percent to $1.180 billion. Revenue in Latin America and Asia Pacific was essentially flat at $1.463 billion, reported by Demócrata, citing the company's figures.

The Pace restructuring behind the Nike layoffs

The Nike layoffs stem from an expanded restructuring program called Pace, which targets roughly $2.5 billion in cumulative savings through fiscal 2031. The plan reorganizes the business into three geographic regions, Americas, Asia Pacific and Greater China, and Europe, the Middle East and Africa, replacing the current four-region structure. Nike also plans to open a new campus in India with what it described in a statement as strong capabilities and access to talent.

The Nike layoffs will cut roles across the company, though Nike has not said how many positions will be affected. Chief executive Elliott Hill told employees the work would result in "fewer roles across Nike" and acknowledged the announcement creates uncertainty for staff. Decisions about which roles are impacted are expected to begin early next year. The program is expected to generate roughly one billion dollars in pre-tax restructuring charges through fiscal 2031, mostly for severance and related employee costs, on top of about $300 million in severance already recognized during fiscal 2026.

Why Greater China keeps dragging results

China remains Nike's biggest problem. Sales there have tumbled for several quarters, and Hill said on a post-earnings call that the company's performance business is "not yet large enough to offset the pressure" in Nike sportswear, the Jordan brand and Greater China. He added that reviving those weak areas "will take time" and pointed to a deliberate cutback in the number of Jordan retro launches. Sneaker culture still moves product elsewhere in the market, as recent footwear drops show, but Nike's own lifestyle lines are lagging.

Nike is now two years into Hill's turnaround effort, which has focused on key sports such as running and on rebuilding relationships with wholesale retailers. Analysts have said, according to Reuters, that the company's troubles have stemmed in large part from a failure to release enough new, compelling products, leading to heavier promotions and discounts. The Nike layoffs arrive as the company tries to fix that product pipeline while keeping costs under control.

What Nike is forecasting next

For fiscal 2027, Nike expects revenue to decline by a high single-digit percentage, a weaker outlook than analysts had forecast. Adjusted diluted earnings per share are projected between 1.15 and 1.35 dollars, excluding roughly fifteen cents a share in restructuring charges tied to the Pace plan, the program behind the Nike layoffs. The outlook suggested the turnaround would take at least several more quarters, and Nike shares, already down nearly 45 percent since the start of the year, fell again in Friday's premarket session, according to Reuters.

Chief financial officer Dave Denton said in the earnings release that first-quarter results were in line with the company's expectations, crediting improved gross margin and rigorous cost management. Looking ahead, he said Nike remains focused on strengthening its product portfolio, improving productivity across the company and allocating resources with discipline to generate value for shareholders over the long term. The Nike layoffs are part of that cost discipline.

The planned Nike layoffs and the new cost program mark a deepening of the restructuring Hill launched last year. Nike's overhaul is one of several major corporate moves this week, alongside moves like the revised onsemi-Synaptics acquisition. More detail on affected Nike roles and locations is expected as the company works through the plan, with employee notifications beginning next year.