Nike, the largest US sports equipment maker, is preparing a major business restructuring and further job cuts after the company forecast that revenue in fiscal 2027 will decline more than the market expects, amid continued sluggish sales in China. Nike expects the problems to persist for several more quarters, and first-quarter sales in China fell 26% on a constant-currency basis. Nike shares fell 8.5% in after-hours trading on Thursday, October 1. The company expects fiscal 2027 revenue to decline at a high single-digit rate, compared with analysts' average forecast of a roughly 2% drop for the full year. Nike announced a new operating model, reducing its global business regions from four to three: the Americas, Asia Pacific and China, and Europe, the Middle East and Africa, or EMEA, along with job cuts, and it plans to open a new campus in India. The company does not yet know how many positions will be eliminated and will begin notifying affected employees in 2027. The plan is expected to save about 2.5 billion dollars in costs by fiscal 2031, with most of the savings coming in fiscal 2029 and fiscal 2030. Elliott Hill, Nike's chief executive, said the company's sports goods business is not yet large enough to offset pressure from its sportswear business, the Jordan brand and the China market, adding that a recovery in the weaker parts of the business will take time and that Nike will reduce the number of retro Jordan product launches. Neil Saunders, managing director at GlobalData, said the restructuring plan is not problematic in itself but reflects that Nike's current business model may no longer suit the situation.
Nike IncNike announced a restructuring with further job cuts and a new operating model, expecting $2.5B in cost savings by fiscal 2031.
