After the corona pandemic, Adidas is ensnaring retailers. Nike is taking the opposite route: In the future, customers should buy shoes with the “Swoosh” online directly from the manufacturer, not in the store. The decision ends in fiasco. The employees pay the price.
Nike is not coming out of the crisis. CEO Elliott Hill is therefore giving the world's largest sporting goods manufacturer the next austerity program with further job cuts. By mid-2031, the program called “Pace” (“Tempo”) is expected to reduce costs by $2.5 billion, the US company announced when presenting its annual figures. It's about restructuring the operational business model to support the announced "sports offensive": a modernization of the supply chains, a new corporate campus in the growth market of India and a further streamlining of the organization.
“We need to do more with Nike sportswear, the Jordan brand and in China,” Hill said. "And we are taking steps to strengthen these businesses in the long term." But sales are initially going down: For the 2026/27 financial year (as of the end of May), Hill predicted a drop in sales of a high single-digit percentage - significantly more than analysts had expected. In the first quarter it fell by four percent to $11.2 billion. Adidas, on the other hand, is expecting an increase in sales of up to ten percent for the current year.
Hill once again asked investors to be patient: the growth in competitive sports was not yet enough to offset the pressure in the above-mentioned sectors, he told analysts. Getting them back up to speed “will take time.” The classics of the “Jordan” brand, which is run together with ex-basketball player Michael Jordan, are currently in the process of reducing the number of market launches.
Shares fall double digits
Hill has been trying for two years to get Nike back on track and, above all, to mend relationships with retailers. The sporting goods manufacturer largely gave up this during the pandemic in order to focus on more profitable direct sales in its own online shop. The decision was a failure: competitors like Adidas took advantage of the freed-up window space to display their own shoes and other items more prominently. Nike offers could hardly be found by customers.
According to analysts, however, the problems lie deeper: Nike is unable to bring new bestsellers onto the market. This forces Nike and retailers to offer higher discounts and price reductions.
In any case, the shareholders' trust seems to have been used up: numerous analysts reacted by significantly lowering their price targets. Nike shares fell 8.5 percent after hours on the US markets. In Frankfurt it fell by more than ten percent on Friday and initially also affected the shares of rivals Adidas and Puma. However, these subsequently recovered.
The retailers' verdict is harsh: Nike's problems are self-inflicted, they say. "There's nothing inherently wrong with the plans, but they suggest that the current business model is no good," said expert Neil Saunders of Globaldata. "That raises the question of why this wasn't changed sooner."
In the USA, sales rose by two percent from June to August, mainly thanks to the World Cup in North America. Nike experienced the biggest sales declines in China and Europe, where rival Adidas is based.
The number two on the world market had ensnared retailers under Björn Gulden. Adidas has also successfully reissued classics from the 70s and 80s in many variations. The German sporting goods manufacturer was also able to attract new customers with a regionalization strategy, especially in China.
At Nike, sales in China - traditionally a profit driver - fell by 26 percent in the summer. The company generates a good seventh of its global sales there. Nike offended major retailers there in the summer by announcing that they would no longer be allowed to sell Nike products online from January onwards. The US group wants to regain pricing power.
Nike did not initially quantify the extent of the job cuts. It was said that the affected employees will be informed next year. The group expects costs of around a billion dollars by 2031, the majority of which “relates to the workforce”. The US company had already set aside $300 million for severance pay and announced the elimination of 1,400 jobs in the spring. A further $300 million will now be added in the current 2026/27 financial year.
Earnings per share will decline to between 1.15 and 1.35 (2025/26: 2.10) dollars - even without the burden of the austerity program. “Pace” will cost another $0.15 per share. In the first quarter, earnings fell slightly to 48 cents per share. Net profit shrank to $712 million.
