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Nike’s comeback is becoming more painful than investors had hoped.
Shares of the sportswear giant sank 8.5% in extended trading on Thursday after weaker-than-expected quarterly sales and a gloomier full-year outlook arrived alongside another restructuring plan that will eliminate jobs.
Chief executive Elliott Hill has spent nearly two years rebuilding Nike around sport, innovation and stronger wholesale relationships.
But Greater China sales fell 26% on a currency-neutral basis, several lifestyle franchises remain under pressure, and fiscal 2027 revenue is now expected to decline by a high single-digit percentage.
Nike earnings: Outlook was worse than the quarter
Nike reported fiscal first-quarter revenue of $11.21 billion, down 4% from a year earlier and below Wall Street’s $11.32 billion expectation.
Diluted earnings were $0.48 a share, while gross margin improved 60 basis points to 42.8%, helped by lower warehousing and logistics costs.
The bigger shock was guidance. Nike expects fiscal 2027 revenue to decline by a high single-digit percentage, compared with analysts’ previous expectation of roughly a 2% fall. Adjusted earnings are forecast at $1.15 to $1.35 a share.
CFRA analyst Zach Warring told Yahoo Finance that this was “a quarter you’d expect from a new CEO three or four quarters in, but not two years in.”
That captures the frustration around the stock. Hill inherited major problems, but nearly two years into his tenure, expectations are being reset lower rather than the business returning to growth.
Nike’s comeback plan now comes with fewer jobs
Nike unveiled Pace, an operating-model overhaul designed to extend its Sport Offence strategy across the company.
The programme includes supply-chain modernisation, a new campus in India, consolidation from four geographic divisions to three and organisational streamlining. Nike expects Pace to produce about $2.5 billion in cumulative savings through fiscal 2031.
Those savings will carry a cost. Nike expects around $1 billion of pre-tax charges, primarily employee-related, over the same period.
Hill told staff the changes would mean “fewer roles across Nike,” with decisions on affected positions beginning in calendar 2027.
The new cuts come after Nike had already eliminated nearly 2,200 jobs earlier in 2026.
China and ageing classics remain the real test
Greater China revenue fell 26% on a currency-neutral basis, extending the region’s decline to a ninth consecutive quarter. North America was a brighter spot, rising 2%, helped by growth in performance categories.
Hill acknowledged that Nike’s performance business is not large enough to offset weakness in Sportswear, Jordan Brand and Greater China.
Needham analyst Tom Nikic had warned before earnings that “demand trends remain soft, inventory levels remain high, promotional activity remains intense, and competitive dynamics remain unfavourable.”
That diagnosis looks more important after the latest guidance. Nike still needs fresh products to create enough demand to reduce promotions and restore pricing power.
The classics problem remains central. Bank of America recently downgraded Nike to Underperform and cut its price target to $30 from $47, arguing that innovation is being overshadowed by pressure in older lifestyle franchises and that the sales recovery may not arrive until fiscal 2028.
Nike is finding pockets of success in running and other performance categories, and margins improved during the quarter. But the new forecast suggests those gains are still being overwhelmed elsewhere.
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