Nike Shares Plunge Amidst Revenue Warnings and Layoff Plans

Nike shares experienced a sharp decline of 6.7% on Friday, following the sportswear giant's issuance of a disappointing revenue forecast and an announcement of impending layoffs. This marks the second consecutive day of stock depreciation for Nike, contributing to a year-to-date drop of over 48%.

On Thursday, Nike reported a 4% decrease in first-quarter revenue, reaching $11.2 billion. The company attributed this downturn to decreased sales in Greater China, though gains in North America provided some offset. Challenges were also noted within its Sportswear and Jordan brands.

Net income for the quarter was $712 million, a 2% decrease compared to the $727 million reported in the previous year. Looking ahead, Nike anticipates a high-single-digit decline in revenue for fiscal year 2027. To address this, the company is implementing a new cost-cutting initiative known as "Pace," which is expected to result in additional layoffs in the coming year.

"This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty. I don’t take that lightly," wrote Elliott Hill, president and CEO of Nike, in a memo to employees on Thursday. He added, "Throughout this process, we will communicate directly, act with transparency and treat people with respect. Decisions about impacted roles related to this work will begin in calendar year 2027 and beyond."

The "Pace" plan aims to achieve $2.5 billion in cost savings by 2031. Details regarding the number of employees who will be affected by the upcoming layoffs have not yet been released. This follows two previous rounds of job cuts earlier this year, which affected 775 positions at a U.S. distribution center in January and an additional 1,400 roles within the tech division in April.

Nike is also restructuring its business operations. The "Pace" initiative includes modernizing the company's global supply chain and reorganizing its business into three geographic regions: Americas (combining North America and Latin America), APGC (Asia Pacific and Greater China), and EMEA (Europe, Middle East, and Africa). A new campus is also planned for Bengaluru, India, intended to "strengthen how we serve athletes around the world, including in India."

The company is scheduled to provide further details on its five-year outlook during its investor presentation on November 16 and 17.

Nike, despite remaining the world's largest sports brand, has faced increasing competition from emerging brands such as On, Hoka, Arc'teryx, and New Balance. The rapid growth of On, a running shoe brand known for its lightweight and cushioned footwear, has presented a particular challenge. This increased competition comes as high-profile athletes, including Kylian Mbappé, Lamine Yamal, Harry Kane, and Ousmane Dembélé, have recently ended their partnerships with Nike in favor of rivals.

Last month, Nike was removed from the S&P 100 index after an 18-year tenure.