Nike Slashes Jobs, Forecasts Revenue Decline as Turnaround Stalls

Nike set out plans to cut jobs and forecast a decline in revenue for the coming fiscal year as demand for its sneakers and sportswear stalls across markets from the United States to China, the clearest signal yet that chief executive Elliott Hill’s two-year turnaround effort has yet to gain traction. Sales in the current fiscal year, which began in June, would probably fall by billions of dollars, the company said alongside its first-quarter results. The announcement sent shares down more than 3 percent in after-market trading, deepening a slide that has already erased more than half of the company’s market value over the past year.

The job reductions form part of a $2.5bn cost drive at the 73,000-employee company, which also plans to open a new campus in Bengaluru, India, and consolidate its geographic divisions from four to three. The restructuring is designed to strip out layers of bureaucracy and shift resources toward product innovation and local market responsiveness, areas where Nike has lost ground to both heritage rivals and a wave of challenger brands. Hill, in a note to employees, framed the changes as existential: the future belongs to companies that can move faster, serve athletes and consumers more locally, and invest more aggressively in innovation.

The urgency is justified by the numbers. Revenue in the first quarter ended in August totalled $11.2bn, down 4 percent year on year and worse than consensus estimates compiled by Visible Alpha. Net income fell 2 percent to $712mn. The shortfall is not a one-off; it reflects a structural problem in how Nike goes to market. The company’s heavy reliance on wholesale partners and its own direct-to-consumer push, which for years was the engine of margin growth, have both matured at a moment when consumer spending on discretionary goods is cooling and competition in the athletic footwear category has never been more intense.

The strategic response is a bet on speed and focus. Consolidating four geographic regions into three is meant to reduce hand-offs and shorten decision cycles, while the Bengaluru campus signals a deeper commitment to India as a growth market at a time when China, long a profit engine, has become a source of weakness. The $2.5bn cost program is intended to fund these investments without pressuring the balance sheet, but it carries its own risk: cutting headcount and restructuring operations can disrupt the very innovation pipeline that Nike needs to reignite demand.

The broader question is whether the problems are cyclical or structural. If the former, cost cuts and a leaner operating model may be enough to ride out the downturn and emerge with healthier margins. If the latter, and the evidence increasingly points that way, Nike needs more than efficiency gains; it needs a product and brand proposition that resonates with consumers who have shifted their loyalty to newer, nimbler competitors. Hill’s “Win Now” strategy has been slow to catch fire, and the market’s reaction to Thursday’s guidance suggests investors are not yet convinced the plan will deliver.

For a company that defined the athletic wear boom of the past decade, the path forward requires a difficult balance. Cost discipline must fund, not undermine, the investments in design, marketing, and local market execution that will determine whether Nike can arrest its decline or cede further ground. The coming quarters will show whether the restructuring is a prelude to renewal or the beginning of a long, grinding retrenchment. For now, the market has chosen to wait and see.