Key Takeaways:
- Nike plans to reduce roles as part of a new multiyear operating overhaul.
- Executives said Sportswear, Jordan and Greater China will keep weighing on results while the largest savings arrive later.
- Nike is also moving to a new regional structure.
Nike, Inc. plans to reduce the number of roles across the company over time as part of Pace, an operating model overhaul that includes further streamlining of the organization to reduce costs. The company expects the majority of the program’s savings in fiscal 2029 and fiscal 2030.
Nike President and Chief Executive Officer Elliott Hill described the workforce piece of the program on the company’s earnings call Thursday.
“And the final part of Pace is enhancing the way we work across Nike, which will change the shape and size of our workforce,” Hill said.
Hill said Nike will add capabilities in some areas and eliminate duplication in others.
“Over time, those changes will reduce the overall number of roles across Nike, Inc.,” Hill said.
Nike did not disclose how many roles would be affected. Pace includes and builds on a cost realignment plan the company announced in March 2026.
Analysts at BNP Paribas said Nike’s fiscal 2027 forecast was worse than they had feared and that the rightsizing of the business may last for several years.
Pace Costs and Savings
Nike expects Pace to deliver approximately $2.5 billion in cumulative savings through fiscal 2031, before charges and any reinvestment. Pre-tax charges are expected to total about $1 billion through fiscal 2031, primarily employee-related costs. That is in addition to about $300 million of severance costs recognized in fiscal 2026, and Nike expects about $300 million of the charges to be recognized in fiscal 2027.
Nike said the estimates are subject to assumptions including local law requirements in various jurisdictions, and actual savings and charges may differ.
Executive Vice President and Chief Financial Officer Dave Denton, who is new to the company, said Nike has begun taking actions under Pace and plans to reinvest a portion of the savings into the business. He said the majority of savings should come in fiscal 2029 and fiscal 2030, with full realization continuing into fiscal 2031.
Denton said in response to an analyst’s question that some savings are already showing up, with supply chain actions contributing to gross margin.
First Quarter Results
Nike reported revenue of $11.2 billion for the fiscal 2027 first quarter ended Aug. 31, down 4% as reported and down 5% on a constant currency basis. Gross margin expanded 60 basis points to 42.8%. Nike’s press release attributed the increase primarily to lower warehousing and logistics costs. Denton said supply chain cost management and currency tailwinds helped, partly offset by higher discounts and channel mix.
Net income was $712 million, down 2%, or $0.48 per diluted share.
Nike Direct revenue was $4.1 billion, down 8% as reported and 9% on a constant currency basis, driven by a 13% decline in Nike Brand Digital and a 5% decline in Nike-owned stores.
North America grew 2% and EMEA declined 5% on both measures. Asia Pacific and Latin America fell 2% as reported and was flat on a constant currency basis.
Reorganization Into Three Geographies
As part of Pace, Nike plans to organize into three geographies. The Americas will combine North America and Latin America, and APGC will combine Asia Pacific and Greater China. EMEA will continue operating as it does today. Nike expects teams to move into the new structure in fiscal 2028.
“We’ll reduce layers and move more resources to the countries, territories, and cities and give our local teams more ownership of winning in their markets,” Hill said.
Nike is also establishing a new campus in Bengaluru, India, staffed by full-time Nike employees across a number of functions who will work with teams around the world.
Other Nike Developments
Growth rates Nike cited on the call are on a constant currency basis unless noted.
Nike Performance
Nike Performance grew high single digits in the quarter, led by double-digit growth in running, global football, tennis and golf. Global football got a lift from the World Cup.
“Our Nike Performance business is not yet large enough to offset the pressure we’re seeing in Nike Sportswear, Jordan Brand and Greater China,” Hill said.
Nike Sportswear
Nike Sportswear, just under half of quarter revenue, fell low double digits. Nike cut Dunk revenue by nearly 50% on purpose, which created a headwind of roughly $200 million for Sportswear. Hill said the company is breaking Sportswear into smaller areas of focus built around specific consumer insights and style preferences.
Jordan Brand
Hill said Jordan Brand represented 13% of Nike’s global business in the quarter, and its revenue fell by mid-teens. Nike plans to reduce the volume and frequency of specific Jordan Retro launches, and Hill said North America will feel the biggest near-term impact.
Greater China
Greater China revenue was $1.18 billion, down 22% as reported and 26% on a constant currency basis. Nike is eliminating distribution through digital channels that are not aligned with its marketplace strategy. It will concentrate its online presence on official Nike flagship storefronts on Tmall, JD.com and Douyin, along with Nike.com and the Nike app. Hill said the cleanup will take multiple seasons.
“The guidance range that I just provided to you assumes that China actually gets worse from a revenue perspective for the balance of this year,” Denton said.
Outlook for the Turnaround
Denton said Nike is making deliberate choices across parts of its portfolio, particularly in Nike Sportswear, Jordan Brand and Greater China, and will keep reducing supply across key parts of the marketplace. He said the supply reductions will pressure reported revenue for the remainder of fiscal 2027 and into fiscal 2028.
Responding to an analyst’s question about the strategy, Hill said Nike has strengthened its foundation since his return.
“At our size and scale, meaningful change takes time,” Hill said. “Our turnaround is happening one sport community, one city, one country at a time, and we are reallocating resources against our biggest opportunities.”
Impact on Wholesale Partners
Nike Brand wholesale revenue was $6.8 billion, down 1% on both a reported and constant currency basis. North America wholesale revenue rose 9% on both measures, while Greater China wholesale revenue fell 28% as reported and 31% on a constant currency basis.
Hill said some aged, higher-volume Sportswear footwear sold through below expectations, which has affected Nike’s future order books. Nike is working with wholesale partners to clear excess inventory and create what Hill called a healthy marketplace.
“Overall, there’s a lack of energy in the lifestyle space right now, which is impacting traffic,” Hill said.
Nike has also discussed the planned reduction in volume and frequency of specific Jordan Retro launches with its wholesale partners. Hill said the two sides will work to restore balance to the marketplace.
Denton said the supply reductions are meant to support a healthier marketplace environment and stronger full-price realization.
Converse
Converse revenue was $263 million, down 28% on both a reported and constant currency basis, with declines across all territories.
Denton said part of his role is getting Converse, along with Nike Sportswear and Jordan Brand, back to financial health.
Fiscal 2027 Forecast
Nike forecasts fiscal 2027 revenue to decline in the high single digits. It expects adjusted diluted earnings per share of $1.15 to $1.35, which excludes about $0.15 of restructuring expenses related to Pace.
Denton said the second quarter will face a headwind of about 400 basis points to revenue from lapping Cyber Week promotions in EMEA and a higher North America sell-in comparison.
Nike will hold an Investor Day in November, where it plans to share its long-term growth algorithm and more detail on Pace.
Analyst ReactionÂ
In a research note Friday, BNP Paribas analysts Laurent Vasilescu, Aubrey Tianello, Leah Yang and Lucas Cohen lowered their price target on Nike to $19 from $23 and kept their underperform rating.
The analysts described Pace as Nike’s third restructuring since fiscal 2024. They said the first two programs cost a combined $828 million.
“We’ve seen no operating leverage,” the analysts wrote.
The analysts said management had previously indicated its Win Now strategy would be done by the end of 2025, and that the date was later pushed to the end of 2026. They said they did not hear anything about the strategy or a new timeline for it when Nike reported results.
“This would suggest that the rightsizing of the business may last for several years to come,” the analysts wrote.
The analysts estimated that Nike’s forecast for a high single digit revenue decline leaves about $4 billion in revenue up for grabs for emerging brands such as On, Hoka, Salomon and Saucony.
