Nike’s stock dropped 6.7% on Friday following a bleak revenue forecast and an announcement of impending layoffs, as more athletes are turning to competing sneaker brands.
This decline marked the second consecutive day of losses for Nike, resulting in a staggering 48% decrease in the brand’s stock this year alone.
In its first-quarter report released on Thursday, Nike detailed a 4% revenue drop to $11.2 billion, attributing part of this to falling sales in Greater China, which were somewhat balanced by improvements in North America, and ongoing issues within its Sportswear and Jordan lines.
The company’s net income stood at $712 million, reflecting a 2% decline from last year’s $727 million.
Looking ahead, Nike forecasted a high-single digit revenue decrease for the fiscal year 2027 and introduced a new model named “Pace” aimed at cost reduction, which is expected to lead to further job losses next year.
Elliott Hill, the company’s president and CEO, acknowledged the unsettling nature of these changes in a message to employees, stating, “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.”
He emphasized that throughout the transition, Nike would strive for direct communication, transparency, and respect towards those affected, with decisions regarding layoffs set to start in 2027 and beyond.
Nike’s legacy began in 1985 with the launch of its first Air Jordans, which originally had a forecast of 100,000 pairs sold in the first year. Instead, it hit 4 million pairs, cementing a long-standing legacy through its partnership with Michael Jordan.
However, the brand’s allure has been waning. Just a few weeks prior, soccer star Kylian Mbappé ended a two-decade partnership with Nike to sign with competitor On. Other prominent athletes, including Lamine Yamal, Harry Kane, and Ousmane Dembélé, have also severed ties with the brand.
Hill addressed these setbacks, noting, “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.”
The Pace initiative aims for $2.5 billion in savings by 2031, though Nike has not disclosed the number of employees that will be affected by the anticipated layoffs.
This year, the company executed two rounds of layoffs, eliminating 775 positions at a US distribution center in January and another 1,400 jobs in the tech sector in April.
The Pace strategy will also focus on upgrading Nike’s global supply chain, dividing the business into three regional segments, and establishing a new campus in India.
The three divisions will include the Americas (North America and Latin America combined), APGC (Asia Pacific and Greater China), and EMEA (Europe, Middle East, and Africa).
Nike’s new campus in Bengaluru, India, is intended to enhance service to athletes globally, particularly in India.
Details regarding the five-year outlook are expected to be revealed at the investor presentation scheduled for November 16 and 17.
While Nike still holds the title of the largest sports brand worldwide, it faces significant challenges from emerging brands like On, Hoka, Arc’teryx, and New Balance.
On, a running shoe brand established in 2010 and recognized for its lightweight cushioned shoes, has been a notable competitor for Nike.
In addition, tennis player Roger Federer, another former collaborator with Nike, played a crucial role in helping On introduce its first tennis-inspired shoe back in 2020.
Last month, Nike made headlines for exiting the S&P 100 index after an 18-year presence.
