Nike shares tumbled 6.7% Friday after the sportswear giant shared a dismal revenue forecast and warned of upcoming layoffs, as athletes flock to rival sneaker brands.
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athletes → tumble → brands
It was the second straight day of declines for Nike, putting the sneaker brand’s stock down more than 48% so far this year.
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It → put → stock
On Thursday, Nike reported that its first-quarter revenues slumped 4% to $11.2 billion, citing declines in Greater China – partially offset by gains in North America – and challenges in its Sportswear and Jordan brands.
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revenues → report → brands
It expects revenue to fall by high-single digits in fiscal year 2027 and unveiled a new operating model called “Pace” designed to cut costs – which will lead to more layoffs next year.
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which → expect → layoffs
“This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty.
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news → result → uncertainty
I don’t take that lightly,” Elliott Hill, president and CEO of Nike, wrote in a note to employees Thursday.
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Hill → take → employees
“Throughout this process, we will communicate directly, act with transparency and treat people with respect.
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we → communicate → respect
Decisions about impacted roles related to this work will begin in calendar year 2027 and beyond.
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Decisions → impact → year
When Nike introduced its first Air Jordans in 1985, it expected to sell about 100,000 pairs in the first year.
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it → introduce → year
Instead, it sold 4 million and the infamous partnership with basketball Hall of Famer Michael Jordan turned Nike into the brand to beat for decades.
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partnership → sell → decades
But the company has steadily been losing its appeal.
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company → lose → appeal
A few weeks ago, Madrid striker Kylian Mbappé ended his two-decade partnership with Nike, leaving for rival sneaker brand On.
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Mbappé → end → On
Global soccer stars Lamine Yamal, Harry Kane and Ousmane Dembélé have also cut ties with Nike.
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stars → cut → Nike
Hill addressed these challenges in a statement, saying: “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.”
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we → address → term
The new Pace plan is expected to deliver $2.5 billion in cost savings by 2031.
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plan → expect → 2031
Nike did not say how many staffers would be impacted in expected layoff rounds.
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staffers → say → rounds
The company has already carried out two rounds of layoffs this year, cutting 775 jobs at a US distribution center in January and another 1,400 roles from the tech division in April.
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company → carry → April
Pace will also include efforts to modernize Nike’s global supply chain; split the company’s business into three geographies; and a new campus in India.
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Pace → include → India
The three geographies will be Americas, combining North America and Latin America; APGC, bringing together Asia Pacific and Greater China; and EMEA, which includes its Europe, Middle East and Africa businesses.
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which → combine → businesses
Nike is also opening a new campus in Bengaluru, India, which will “strengthen how we serve athletes around the world, including in India.”
Management is expected to share more details on its five-year outlook at its upcoming investor presentation on Nov. 16 and 17.
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Management → open → Nov.
Though Nike is still the largest sports brand in the world, it has struggled amid increasing competition from rising brands including On, Hoka, Arc’teryx and New Balance.
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it → struggle → On
On – a running shoe brand launched in 2010 known for its light, cushiony shoes – has posed a particular challenge for Nike.
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On → launch → Nike
The same day Mbappé left Nike, On announced the French soccer player as its ambassador as it enters the soccer market.
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it → leave → market
In 2020, tennis star Roger Federer – another former Nike partner – helped On launch its first tennis-inspired shoe.
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On → help → shoe
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