Nike stock Nike is preparing to operate as a smaller company as the sportswear giant faces another period of declining sales and continues efforts to reshape its business.
The company said revenue for its fiscal 2027 first quarter fell 4% to approximately $11.2 billion, while net income declined about 2% to roughly $700 million. Nike also indicated that revenue for the fiscal year ending in May 2027 could decline by a high-single-digit percentage, signaling continued pressure on the business.
Company Plans Restructuring
Nike Chief Executive Officer Elliott Hill said the company is moving ahead with an operating-model transformation designed to simplify its structure and focus resources on areas with stronger potential.
The restructuring is expected to involve fewer positions, with decisions about specific job reductions expected to begin in 2027. Nike also plans to consolidate parts of its regional operations as it seeks to reduce complexity and improve productivity.
The company estimates that its restructuring program could generate approximately $2.5 billion in savings through fiscal 2031, although it expects to incur around $1 billion in pretax restructuring costs, largely associated with employee-related expenses.
China Remains a Major Challenge
Nike continues to face difficulties in Greater China, one of its most important international markets. The company has acknowledged that it needs to strengthen its position in China while responding to increasing competition and changing consumer preferences.
Nike is also focusing on its Sportswear and Jordan businesses, which have experienced challenges as the company works to refresh its product lineup and rebuild momentum.
In North America, Nike’s performance was comparatively stronger, but growth remained limited. The company said North American sales helped offset declines in some other regions during the latest quarter.
Direct Sales Continue to Weigh on Results
Nike’s direct business also remained under pressure. Direct revenue fell 8% during the quarter, including a 13% decline in Nike Brand Digital revenue and a 5% decrease at company-owned stores.
Converse also recorded a significant decline, with quarterly revenue falling 28% from the previous year.
At the same time, Nike reported some improvement in gross margin. Gross margin increased 60 basis points to 42.8%, helped in part by lower warehousing and logistics costs.
A New Phase for Nike
The latest restructuring represents another step in Hill’s effort to turn around Nike’s performance. The company has already taken steps to reduce costs and streamline operations, while placing greater emphasis on key sports categories and product innovation.
Nike says its new approach is intended to accelerate growth in its stronger performance businesses while addressing weaknesses in Sportswear, Jordan and Greater China.
For now, however, the company expects sales pressure to continue. The combination of declining revenue, restructuring costs and planned workforce reductions marks a significant transition as Nike attempts to build a leaner operating structure and restore growth.