Nike’s long-awaited turnaround is facing another difficult stretch after the sportswear giant reported weaker first-quarter sales, warned of a deeper revenue decline and announced another round of restructuring and job cuts. The latest update has renewed concerns about whether CEO Elliott Hill’s efforts to restore growth can quickly reverse the company’s prolonged slowdown.
Nike reported fiscal 2027 first-quarter revenue of $11.2 billion for the three months ended August 31, down 4% from a year earlier. Revenue also fell 5% on a currency-neutral basis. Net income slipped 2% to about $712 million, while diluted earnings per share came in at 48 cents. The earnings figure was better than Wall Street expectations, but the revenue performance and outlook dominated investor attention.
The biggest concern was Nike’s forecast for the year ahead. The company now expects fiscal 2027 revenue to decline by a high-single-digit percentage, a much steeper fall than investors had anticipated. The warning suggests that the recovery will take longer and that Nike’s problems extend beyond temporary cost pressures or weaker consumer spending.
Investors reacted sharply. Nike shares dropped about 8.5% in extended trading after the results, adding to a decline of more than 40% this year. The latest fall has pushed the company’s market value significantly below its previous peak, reflecting the growing gap between Nike’s former dominance in sportswear and its current performance.
China remains one of the clearest pressure points. Nike’s Greater China revenue fell 22% on a reported basis and 26% on a currency-neutral basis to about $1.18 billion. The region has historically been an important growth and profit market for the company, but Nike has faced weaker consumer demand, intense competition and challenges in rebuilding momentum.
Hill has acknowledged that repairing the China business will not happen quickly. Nike is also changing how it sells products in the market. The company plans to reduce its reliance on thousands of online distributors and move toward greater control of its own digital and retail channels, including platforms such as Tmall, JD.com and Douyin. The strategy is intended to improve pricing discipline and strengthen Nike’s brand positioning.
Nike is simultaneously trying to address weaknesses in its product portfolio. The company has identified Nike Sportswear, the Jordan Brand and Greater China as areas requiring further work. Heavy promotions and discounting have put pressure on the brand, while analysts have pointed to a need for stronger product innovation as competition increases from newer and faster-growing sportswear labels.
The Jordan business illustrates the challenge. Nike has acknowledged that it oversupplied some of its iconic retro products, leading to discounting and reducing their sense of exclusivity. The company is now attempting to reduce the frequency of retro releases and rebuild demand around the franchise.
Nike’s direct business has also weakened. NIKE Direct revenue declined 8% during the quarter, with digital sales down 13% and sales through Nike-owned stores falling 5%. Converse was another drag, with revenue dropping 28% to $263 million. North America offered some relief, with revenue rising 2% to $5.13 billion.
Against that backdrop, Nike has unveiled a new operating model called Pace. The restructuring will simplify the company’s geographic organisation into three regions: the Americas; Asia Pacific and Greater China; and Europe, the Middle East and Africa. The plan also includes supply-chain changes and workforce reductions beginning in 2027. Nike has not yet disclosed the exact number of jobs that will be eliminated.
Nike expects Pace to generate approximately $2.5 billion in cumulative savings through fiscal 2031. The company expects about $1 billion in pretax charges over the same period, primarily related to employee costs, with roughly $300 million of charges expected in fiscal 2027. The restructuring is therefore designed to improve efficiency over several years rather than deliver an immediate turnaround.
India is also becoming part of Nike’s restructuring strategy. The company plans to establish a new campus in India as it reorganises operations and looks for greater efficiency and access to talent. The move comes as Nike seeks to streamline its global structure while strengthening capabilities in important markets.
The company’s gross margin provided one positive signal, improving 60 basis points to 42.8%, helped partly by lower warehousing and logistics costs. Selling and administrative expenses also declined 3%. Those improvements, however, were overshadowed by falling sales and the weaker full-year outlook.
Nike’s challenge now is to make cost savings work alongside a stronger product strategy. Cutting expenses can support margins, but it does not by itself solve declining demand, weak product momentum or changing consumer preferences. The company therefore needs to rebuild excitement around its core sports categories while repairing businesses such as Jordan, Sportswear and Greater China.
Hill returned to Nike as CEO in October 2024 with a mandate to restore the company’s competitive momentum. Nearly two years later, the latest results show that the turnaround remains a work in progress. Nike has acknowledged that stabilising China and rebuilding parts of its lifestyle business will take time.
The company is expected to provide greater detail on its strategy at its investor event in November. Until then, investors will be watching closely for signs that Nike can translate restructuring, stronger sports-focused products and tighter distribution into sustainable sales growth. The latest numbers make clear that the road back for the iconic sportswear brand is proving longer than expected.