Nike plans more job cuts, doubles down on restructuring as China crisis deepens

Nike is planning further job cuts and restructuring its global operations as the sportswear giant grapples with weakening sales in China and forecasts a sharper-than-expected revenue decline for fiscal 2027.

The company said it will reorganise its operating model into three geographic regions, the Americas, Asia Pacific and Greater China, and Europe, Middle East and Africa (EMEA), from the current four. Nike also plans to establish a new campus in India focused on building capabilities and accessing talent.

The company has not yet determined how many roles will be eliminated under the latest restructuring. Employees are expected to be notified from 2027.

The restructuring builds on previous rounds of layoffs, including cuts announced earlier this year, and is expected to generate about $2.5 billion in savings through fiscal 2031. Most of the savings are expected to be realised in fiscal 2029 and 2030.

Nike forecasts sharper revenue decline

Nike expects revenue to fall by a high-single-digit percentage in fiscal 2027, significantly worse than analysts’ expectations of about a 2 per cent decline, according to LSEG data.

The company also missed estimates for first-quarter revenue, with sales falling about 4 per cent to $11.21 billion for the quarter ended 31 August, compared with analysts’ average estimate of $11.32 billion.

Nike CEO Elliott Hill said the company’s performance business is not yet large enough to offset weakness across its sportswear, Jordan brand and Greater China businesses.

“Reviving those weak areas of Nike's business will take time,” Hill said, pointing to a deliberate reduction in the volume of Jordan retro launches.

The company has been attempting to revive growth by focusing on sports such as running and rebuilding relationships with wholesale retailers. However, analysts have pointed to a lack of new products and increased promotional activity as continuing challenges.

China remains a major pressure point

Nike’s China business has deteriorated further, with sales falling 26 per cent on a constant-currency basis in the first quarter. China sales have now declined for nine consecutive quarters.

The market accounts for about 15 per cent of Nike’s annual revenue and is its third-largest market after North America and EMEA.

Nike plans to remove online sales rights from some of its largest retail partners in China from January, in an effort to gain greater control over pricing and distribution. Hill warned that the shift would take multiple seasons and could weigh on revenue and profitability in the near term.

Analysts have questioned whether the company’s problems in China are primarily related to distribution or reflect weaker demand for its products.

“Nike does not have a channel problem in China, but rather a product problem,” BNP Paribas senior analyst Laurent Vasilescu said in a research note.

Outside China, Nike’s North American business provided some relief, with sales rising 2 per cent on a constant-currency basis. Hill said the company’s performance business benefited from the World Cup.

Nike’s gross margin also improved by 60 basis points to 42.8 per cent during the quarter, helped by lower warehousing and logistics costs.

The company is undertaking the restructuring as it seeks to accelerate Hill’s turnaround strategy, while facing growing competition from international and domestic sportswear brands in China. The departure of football star Kylian Mbappe, who ended his two-decade partnership with Nike in September to join Swiss rival On, has added to the company’s challenges.