Nike shares hit 13-year low as layoffs, China slump weigh

Nike ↗ 0.23% is cutting more jobs and redrawing its global structure under a program called "Pace." The plan aims to save about $2.5 billion through fiscal 2031, and it comes after a quarter in which sales shrank and the company forecast a steeper drop in full-year revenue than investors expected. The shares have fallen to their lowest level in more than a decade, about 80% below their late-2021 peak.theglobeandmail+1

Chief Executive Elliott Hill announced the overhaul on Oct. 1 alongside first-quarter results for fiscal 2027. Nike will merge its four geographic regions into three: Americas; Asia Pacific and Greater China; and EMEA. It will also open a new campus in Bengaluru, India. Nike expects about $1 billion in pretax charges, mostly severance and other employee costs. Most of the savings are expected in fiscal 2029 and 2030.reuters+2

Job cuts still unspecified

In a memo to employees, Hill said the changes "will result in fewer roles across Nike." He did not say how many jobs would go, and decisions on affected positions will start in 2027. "Anything you may see in media reports around impacts is speculative because we do not yet know the number of roles or specific locations of positions," he wrote, according to Fox Business. The leadership team for the combined Asia Pacific and Greater China region will be based in Singapore, so some roles will move from Nike's headquarters in Beaverton, Oregon.foxbusiness

This is Nike's latest round of cuts this year. It eliminated about 775 U.S. jobs in January and roughly 1,400 mostly technology roles in April.reuters

China drags on results

Revenue fell 4% to $11.2 billion, missing analysts' estimates. Earnings of 48 cents a share beat the consensus. Greater China sales fell 26% excluding currency effects, and Converse sales dropped 28%. North America was a bright spot, with revenue up 2% to $5.1 billion. Nike expects fiscal 2027 revenue to fall at a high-single-digit rate, with adjusted earnings per share of $1.15 to $1.35. Bloomberg's Retail Monitor said the Jordan Brand slump is adding to the company's problems.zacks+2

Analysts split

Analysts reacted in different directions. Goldman Sachs The Goldman Sachs Group, Inc. ↗ 1.57% downgraded Nike to Sell with a $27.50 price target, citing concerns about market share. BNP Paribas Exane cut its target to $19 and kept an Underperform rating. Freedom Broker went the other way, upgrading the stock to Buy. Piper Sandler ↗ 0.85% reiterated its Neutral rating and $28 target on Oct. 9. It said the company's guidance for fiscal 2027 earnings could be a floor, but it expects sales to fall by a mid-single-digit percentage in fiscal 2028 before modest growth returns in fiscal 2029. The firm said "the timeline for sales recovery remains the more critical factor".investing

Nike plans to give more details on the restructuring at its investor day on Nov. 16–17.foxbusiness