After reporting lower-than-anticipated revenues for the first quarter, Nike has outlined further steps in its ongoing business transformation. The company is preparing for additional job cuts and an intensified global restructuring in the upcoming year as part of its operational overhaul.
Revenue Weakness Triggers Major Corporate Reorganization
On Thursday, Nike unveiled another restructuring phase meant to address its lagging business performance. This move will result in an unspecified number of layoffs in the next year as Nike proceeds with its “Pace” restructuring initiative. For the quarter, Nike saw a 4% decline in total revenue, reaching $11.2 billion. Although revenue in North America grew by 2%, that gain was offset by sharp losses elsewhere, such as a 22% drop in Greater China and a steep 28% decrease in Converse sales.
Nike’s reorganization plan involves merging its international business units into three main geographic regions: the Americas (covering North and Latin America), Asia Pacific/Greater China (APGC), and keeping the EMEA division intact (Europe, Middle East, and Africa).
Industry Experts Signal Ongoing Hurdles
The brand is sharpening its focus on supply chain agility and expansion, and is moving forward with a new company campus set to open in Bengaluru, India. Investments will increase in innovation, consumer experiences, sports marketing, and various growth initiatives.
Nonetheless, analysts warn these actions may not be enough. Neil Saunders, Managing Director of GlobalData, highlighted that the steep declines in China and Converse made up about 86% of Nike’s total net sales decline. He characterized the company as “far too sprawling” and said it continues to trail rivals in critical areas. BNP Paribas senior analyst Laurent Vasilescu noted that this marks Nike’s third major restructuring since the start of fiscal 2024, and criticized the lack of “operating leverage” from earlier changes. Saunders likened Nike’s incremental process to “rearranging deckchairs on the Titanic,” and questioned the ability of these changes to turn things around.
Turnaround Efforts Face Delays and Uncertainty
Nike CEO Elliott Hill stated that the Pace restructuring seeks to “accelerate the sport offense,” but acknowledged that further workforce reductions are coming and that the company’s recovery period would now be longer and more challenging. Nike conceded that its sportswear and Jordan brand businesses, along with its China operations, still face “significant work ahead.”
The company forecast that its revenue for the current fiscal year will decline by a “high-single digit” percentage. Analyst Tom Nikic from Needham commented that a successful turnaround appears “very low” in probability as of now, even if some product areas like running, training, and basketball have shown modest improvement. Nike also noted stabilization in its Air Force 1 line after previous oversupply issues, but is now reducing its retro offerings within the Jordan brand due to continued inventory gluts, as outlined in earlier inventory rightsizing updates (full story here).
Jessica Ramírez, managing director at The Consumer Collective, emphasized that while there may be “green shoots” in athletic categories, major challenges persist—especially in sportswear, where she believes “the company feels out of touch.” Ramírez also questioned whether Hill and other leaders are adequately positioned to meet the specific needs facing various product groups.
Unclear Path Forward and Delayed Goals
The outlook for Nike’s turnaround is increasingly uncertain, with no clear timetable for recovery. Analysts noted that the endpoint for the brand’s previous “Win Now” turnaround strategy has shifted from the end of 2025 to the end of 2026, but the latest update from Nike did not specify any new deadlines. Laurent Vasilescu remarked this process of “rightsizing” could drag on for years, extending unpredictability for both shareholders and staff.