Nike Pace plan extends layoffs and regional cuts

On Oct. 1, Nike announced a restructuring program called Pace that will run through fiscal 2031, cut jobs, and consolidate its geographic reporting into three units. The Business Journals reported the announcement came after another quarter of disappointing results. Nike has not said how many positions will be cut; the company told Reuters it does not yet know the number and will start informing employees in 2027. The plan targets about $2.5 billion in cumulative savings, including roughly $1 billion in pretax charges tied mainly to severance, with about $300 million in severance expenses already recognized in fiscal 2026.

The results behind the plan were for the quarter ended Aug. 31 and were reported on Oct. 1. Nike's revenue fell 4% to $11.2 billion, and profit slipped 2% to $712 million. Sportico reported that analysts surveyed by S&P Global Market Intelligence had projected profit of $646 million on revenue of $11.3 billion, so Nike beat the profit estimate but fell short on revenue. Nike now forecasts that full-year fiscal 2027 revenue will drop by a percentage in the high single digits, and adjusted earnings per share are expected to come in between $1.15 and $1.35.

Greater China is among Nike's weakest markets, though the reported size of the decline differs across outlets. NDTV Profit reported the region's revenue fell 22% to $1.2 billion in the quarter, while Newser and CryptoRank said sales fell 26%, with CryptoRank specifying that the figure was currency-neutral. LiveNow from Fox, citing Reuters, noted that China sales have fallen for nine straight quarters and that China accounts for 15% of Nike's annual revenue, making it the company's third-biggest market after the U.S. and Europe, the Middle East and Africa. Sportico reported that domestic competitors such as Li Ning have gained prominence in China while Nike's own performance lagged.

Nike remains in turnaround mode after replacing its CEO in 2024, according to Sportico. In summer 2024, then-CEO John Donahoe said classics such as the Air Force 1 and Air Jordans had started to fall out of fashion. Shortly after, Nike appointed company lifer Elliott Hill to the top role; NDTV Profit dates his return as CEO to October 2024. Hill renewed focus on performance sport and pulled about $2 billion in classic lifestyle shoes from the market. Nike also pulled out of major retailers during Donahoe's shift toward direct-to-consumer sales, a move that let brands such as On and Hoka gain ground with consumers. In the weeks before the Oct. 1 announcement, several large U.S. banks downgraded Nike stock over weakness in the lifestyle shoe business, and both Nike and retailers including Dick's Sporting Goods and Foot Locker said they needed to clear excess casual shoe inventory.

What happens next is mostly scheduled. Hill told employees in a note that the job cuts would begin in calendar 2027 and continue beyond. Newser reported that Hill said the restructuring would mean "fewer roles" and that decisions on layoffs would start in 2027. The geographic realignment takes effect in fiscal 2028, which starts in June. Nike will move to three regions: Americas, Asia Pacific and Greater China, and EMEA. Previously, Greater China had its own reporting unit, while Latin America was part of the same unit as Asia Pacific. Nike is also planning a corporate campus in Bengaluru, India, which Hill described as a way to build capabilities and talent over the long term. Investor reaction to the announcement varied by report. Sportico said Nike shares dropped roughly 4% in Thursday's after-market session to roughly $34 and are down 45% this year. Newser reported a roughly 10% after-hours drop and a year-to-date fall of more than 40%. CryptoRank calculated an after-hours decline of 8.71% to about $32.09 from a regular-session close of $35.15. Neil Saunders, managing director of GlobalData, said there was nothing "inherently wrong" with the restructuring plans, but they suggest "Nike's current model is not really fit for purpose".