Nike Reports Mixed Results, Announces Restructuring... Workforce Cuts to Begin Next Year

[Financial News] Sportswear giant Nike announced a large-scale restructuring plan on the 1st (local time), along with a decline in revenue, despite reporting net income that exceeded market expectations. Nike projected that full-year fiscal 2027 revenue would decline by a high-single-digit percentage. Its shares fell approximately 3% in after-hours trading after the news was released. Nike's stock has already plunged more than 40% this year.
Earnings per share (EPS) came in at 48 cents, above the 43-cent estimate from financial data provider London Stock Exchange Group (LSEG).
Revenue fell 4% year over year to $11.21 billion (approximately 15.24 trillion won), below the $11.32 billion estimate.
Nike's first-quarter net income was $712 million (approximately 968 billion won), down 2% from $727 million in the same period a year earlier.
The main cause of the revenue hit was the continued slump in the Chinese market. Revenue in China plunged 26% from a year earlier. By contrast, revenue in North America reached $5.13 billion, slightly exceeding StreetAccount's estimate of $5.11 billion. The gross margin also came in at 42.8%, marginally above the market expectation of 42.4%.
According to CNBC, Nike also unveiled a plan to overhaul its operating model for long-term growth. Workforce reductions are scheduled to begin in 2027, although the company did not disclose the specific number of jobs to be cut or a detailed timeline.
Nike CEO Elliott Hill said in a letter to employees, "This restructuring will result in a reduction in jobs across the company, and I understand very well that this news increases uncertainty. We are not taking it lightly."
The new strategy includes modernizing the supply chain, reorganizing the company around three regions, building a new campus in India, and changing its work practices and workforce structure. Through these measures, Nike plans to save approximately $2.5 billion (about 3.39 trillion won) in costs by fiscal 2031. The company also added that restructuring costs would reduce fiscal 2027 EPS by approximately 15 cents.
Nike is currently pursuing a rebound strategy that moves at different speeds across business areas according to their priorities. However, it faces the challenge of slowing consumer spending as geopolitical tensions, high inflation and other geopolitical and microeconomic headwinds weigh on consumers.

[email protected] Yoon Jae-jun Reporter