Nike will cut more jobs and consolidate its four geographic regions into three, after forecasting a steeper-than-expected revenue drop for fiscal 2027. The move deepens CEO Elliott Hill's restructuring push as China sales keep sliding and the stock exits the S&P 100.
Nike deepened its restructuring under CEO Elliott Hill on Thursday, announcing a plan to cut more jobs and shake up its global business divisions after the sportswear giant projected a surprisingly steep drop in full-year revenue. Shares fell 4% in extended trading.
A steeper revenue forecast
Nike now expects revenue to decline in high-single digits in fiscal 2027, steeper than its earlier forecast of a low-to-mid-single-digit percentage decline for the first half of the year. The company is shifting to three geographic regions — Americas, Asia Pacific and Greater China, and EMEA — instead of four, and plans a new campus in India. It does not yet know how many jobs or which roles will be cut, and notifications to affected employees will begin in 2027. The program builds on Nike's earlier restructuring push and is expected to deliver about $2.5 billion in savings through fiscal 2031.
China sales keep sliding
China, historically a profit driver for Nike, has shown particular weakness as international and domestic rivals gain ground. Sales there fell 26% on a constant-currency basis in the first quarter, extending a slide that has now lasted nine consecutive quarters. The region accounts for about 15% of Nike's annual revenue and is its third-largest market after North America and EMEA.
Starting in January, Nike will pull online sales rights from some of its biggest retail partners in China, betting that tighter control over pricing and distribution can revive its fortunes there. According to Reuters: "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.
Q1 miss and an index exit
The company posted sales of $11.2 billion for the first quarter, compared with analysts' average estimate of $11.32 billion, according to data compiled by LSEG. Its gross margin rose 60 basis points to 42.8% in the quarter ended August 31, helped by lower warehousing and logistics costs.
The stock's struggles already cost it a place among blue-chip names: S&P Dow Jones Indices removed Nike from the S&P 100 in September as part of a quarterly rebalancing, after 18 years in the index.
Source: Investing.com
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