Nike to Cut Jobs as China Sales Plunge

Nike intends to implement new job reductions after experiencing a steep drop in sales within China and a disappointing opening quarter. Confirming a restructuring of its worldwide operations to cut staff from 2027, the firm has not specified the number of affected positions. These moves are projected to save about £1.9bn by fiscal 2031. Nike also anticipates that revenue will dip by a high-single-digit percentage in its 2027 financial year, which is significantly higher than the roughly two per cent decline analysts had predicted. Following this announcement, shares fell 8.5 per cent in extended trading.

Nike’s first-quarter sales dropped 4 per cent to $11.21bn, missing analyst expectations of $11.32bn as continued weakness in China weighed on performance. Sales in Greater China plunged 26 per cent on a constant-currency basis, marking the ninth straight quarter of decline in the market. China accounts for roughly 15 per cent of Nike’s annual revenue and remains its third-largest market.

The brand has faced growing competition from international sportswear rivals and domestic Chinese labels, alongside concerns about a lack of new products driving demand. CEO Elliott Hill noted Nike’s performance-focused business was not yet large enough to offset weaker trading across its sportswear, Jordan and Greater China divisions. The company is cutting back Jordan retro launches to reduce discounting and restore demand.

Nike is also moving to remove online sales rights from some major wholesale partners in China starting January to gain greater control over pricing and distribution. Hill cautioned the reset would take “multiple seasons” and pressure sales and profitability in the short term.

Separately, Nike is simplifying its global structure, shifting from four to three regions: the Americas; Asia Pacific and Greater China; and Europe, Middle East and Africa. A new campus in India will open as part of the shake-up.

Despite challenges, North American sales rose 2 per cent on a constant-currency basis during the quarter, supported by growth in Nike’s performance ranges. Gross margin increased 60 basis points to 42.8 per cent, helped by lower warehousing and logistics costs. Nike has sought to revive growth under Hill by emphasizing sports such as running and rebuilding wholesale relationships after prior focus on direct-to-consumer. Hill said the company would provide updated targets through the financial year beginning November as restructuring progresses.