Nike posted mixed financial results for its fiscal first quarter on Thursday, with revenue declining 4% to $11.21 billion and net income falling 2% to $712 million. The company attributed much of the revenue weakness to sustained declines in its China business, where revenue dropped 26%. North America revenue reached $5.13 billion, slightly surpassing analyst expectations of $5.11 billion, while gross margin came in at 42.8% compared to estimates of 42.4%.
CEO Elliott Hill acknowledged that despite progress in certain areas, the company’s performance divisions were not yet substantial enough to offset weakness in other segments. Sportswear, which represented just under half of the quarter’s revenue, experienced a low-double digit percentage decline. Hill attributed some of this pressure to a general lack of energy in the lifestyle segment and noted that while consumers remain cautious, Nike needed to bring greater creativity to its offerings.
The company announced a comprehensive restructuring program called Pace designed to position Nike for long-term growth. The strategy will result in layoffs beginning in 2027, though specific headcount reductions were not disclosed. The plan includes modernizing supply chains, reorganizing into three geographic regions—the Americas; Asia Pacific and Greater China; and Europe, the Middle East and Africa—constructing a new campus in India, and implementing workforce changes.
For fiscal 2027, Nike provided guidance projecting revenue declines in the high-single digit percentage range and adjusted earnings per share between $1.15 and $1.35. The Pace restructuring is expected to generate approximately $2.5 billion in savings through fiscal 2031 and will result in a 15-cent restructuring expense to fiscal 2027 earnings per share. This marks the third round of layoffs Nike has announced this year.
Shares fell roughly 3% in extended trading following the announcement. The company has experienced significant pressure from macroeconomic headwinds including geopolitical tensions and inflation, with stock performance declining more than 40% earlier this year.
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