Nike Announces Major Restructuring and Job Cuts Amidst Deepening Sales Slump

Nike is poised for a significant restructuring, including an unspecified number of job cuts, as the company confronts a worsening sales slump and ongoing challenges in the crucial Chinese market. The sportswear giant announced a plan designed to streamline its operations and achieve approximately $2.5 billion in savings by fiscal year 2031.

In an internal memo, CEO Elliott Hill informed employees that the changes "will result in fewer roles across Nike over time." While the exact number of positions and their locations have not yet been determined, Hill acknowledged the uncertainty facing the workforce, stating the company is "not taking it lightly." Employees impacted by these changes are expected to begin being notified in 2027. This follows previous workforce reductions undertaken as part of Hill's efforts to revitalize the brand.

The restructuring will reorganize Nike into three primary geographic regions: the Americas; Asia Pacific and Greater China; and Europe, the Middle East, and Africa. Additionally, the company intends to establish a new campus in Bengaluru, India, aimed at enhancing capabilities and access to talent.

Nike anticipates incurring around $1 billion in restructuring costs through fiscal year 2031, primarily related to employee expenses. This is in addition to approximately $300 million in severance costs already recorded for fiscal year 2026. The company has also reported an estimated $1 billion in costs associated with the plan through fiscal 2031, primarily employee-related expenses, alongside $300 million in severance costs already accounted for in fiscal 2026.

Nike reported first-quarter revenue of $11.2 billion, a 4 percent decrease from $11.7 billion a year prior. The company projects revenue to decline further in fiscal 2027. Investors reacted to the news, with Nike shares experiencing a notable drop in overnight trading.

The slump is particularly pronounced in China, where revenue plunged 26 percent to $1.18 billion in the first quarter after accounting for currency fluctuations. This marks the ninth consecutive quarterly decline in a region that was once a major growth driver for the company. Nike faces stiff competition from domestic brands like Anta and Li-Ning, as well as international competitors such as Adidas and Puma, and emerging running brands like On and Hoka.

Nike's direct-to-consumer business, encompassing sales through its own stores and website, also saw a 12 percent overall decrease in the quarter. The iconic Converse brand, owned by Nike since 2003, experienced a significant revenue drop of 28 percent, falling to $263 million.

In an effort to regain control of its digital presence in China, Nike plans to revoke online sales rights from some major retail partners starting in January. This move comes at a critical time as the company seeks to reassert its position in a challenging market.

CEO Elliott Hill has been focused on revitalizing Nike by emphasizing sports like running, rebuilding relationships with wholesale retailers, and introducing new products. However, he has indicated that significant improvements are needed in Nike Sportswear, Jordan Brand, and the Greater China division, acknowledging that a full turnaround will require sustained effort and time.