Nike shares plunged in premarket trading Friday after the sportswear giant reported another decline in revenue and warned that sales will fall at a high-single-digit rate in fiscal 2027, adding pressure to a turnaround that is increasingly being defined by cost reductions, restructuring and job cuts.
The stock fell 10.36% in premarket trading, extending a decline that has already wiped out nearly 45% of its value since the beginning of the year. The selloff came a day after Nike reported fiscal first-quarter revenue of $11.2 billion, down 4% from a year earlier, while net income fell 2% to $712 million from $727 million.
The results exposed continued weakness in some of Nike’s most important businesses. Revenue declined in Greater China, one of the company’s largest international markets, although growth in North America partially offset it.
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Nike’s outlook was even more concerning for investors. The company expects revenue to decline in the high-single digits in 2027, indicating that the recovery will take longer and require a more extensive restructuring than the market had hoped.
“We have more work to do in NIKE Sportswear, Jordan Brand and Greater China, and we’re taking deliberate actions to strengthen those businesses the right way for the long term,” Nike President and CEO Elliott Hill said.
The combination of weak sales guidance and a new cost-reduction programme has shifted the focus of the turnaround from simply restoring growth to rebuilding the company’s operating model.
Nike unveiled a new operating model called “Pace,” which is expected to generate $2.5 billion in cost savings by 2031. The programme will include changes to the company’s global supply chain, a reorganization around three geographic regions, the establishment of a new campus in India, and further efforts to streamline its corporate structure.
Those changes will also reduce Nike’s workforce.
“This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty. I don’t take that lightly,” Hill said in a separate announcement. “Decisions about impacted roles related to this work will begin in calendar year 2027 and beyond.”
The planned reductions add to a restructuring process that has already resulted in two rounds of layoffs this year. Nike cut 775 jobs across its US distribution centers in January and eliminated another 1,400 positions, primarily in its technology division, in April.
The repeated workforce reductions indicate that Nike is not treating the current weakness as a temporary sales problem. Management is changing the company’s cost base and organizational structure in an effort to generate savings even while revenue remains under pressure.
That approach could improve profitability over time, but it also creates a difficult trade-off for investors. Cost reductions can provide a near-term lift to margins, but they cannot by themselves solve weaker demand in major product categories or restore momentum in markets where the brand has lost ground.
Citi analysts captured that tension in a note on Friday, describing Nike as increasingly a “cost-cutting story” and maintaining a neutral view on the shares after the company’s sales guidance came in below market expectations.
“Nike is turning into a cost-cutting story, announcing a $2.5bn cost savings program as management is adapting to the reality of significant pressure within Sportswear, Jordan, and China,” the analysts said.
The challenge for Nike is that the areas identified for improvement include some of the brands and markets that have historically carried significant weight in its growth story. Sportswear and Jordan remain important parts of the company’s product portfolio, while China has been a critical international market.
Nike’s cost programme provides a potentially significant source of savings, but the timeline is long. The company expects to realize $2.5 billion in savings by 2031, while Citi noted that investors may not get meaningful evidence of when the programme will materially change the company’s trajectory until 2029.
Management is expected to provide greater detail on its five-year outlook at its investor day, giving investors another opportunity to assess whether the restructuring can translate into stronger revenue and earnings performance rather than simply a smaller cost base.
“It isn’t out of the question that Nike can beat some of the guidance they just provided, but there really is no justification (in our view) for Nike to receive a premium multiple versus its growing peers,” Citi analysts said.
That valuation issue is becoming more prominent as Nike’s growth outlook weakens. A company undergoing restructuring can still command investor confidence if there is evidence that the measures are restoring demand and improving returns. But with revenue expected to decline at a high-single-digit rate in 2027, the burden is now on management to demonstrate that the cost savings are part of a broader recovery rather than a substitute for it.
North America currently provides one of the clearer areas of support, but continued weakness in China and pressure across Sportswear and Jordan leave Nike with a narrower path to growth. The company must simultaneously rebuild its product momentum, address regional weakness and reduce operating costs without allowing restructuring to further disrupt its ability to innovate and market its products.
That makes the latest earnings report more consequential than the headline revenue decline suggests. Nike is no longer simply managing through a weak sales cycle. It is redesigning its organization while preparing investors for another year of declining revenue and additional workforce reductions.
While the $2.5 billion savings target gives Nike a substantial financial lever, the company’s falling revenue guidance shows why investors are demanding evidence that the turnaround can eventually produce growth rather than simply lower costs.
Friday’s share-price reaction suggests that the market is placing greater weight on that distinction. Nike has outlined how it plans to become leaner. What remains unresolved is when the company can become a stronger growth business again.