Nike posts mixed Q1 results, forecasts revenue decline and announces restructuring plan with layoffs starting in 2027
Quick Look
- Nike reported fiscal first-quarter earnings of 48 cents per share, beating estimates of 43 cents, while revenue came in at $11.21 billion, missing the $11.32 billion forecast.
- The company announced a restructuring plan to deliver $2.5 billion in savings by fiscal 2031, including layoffs beginning in 2027, and expects full-year fiscal 2027 revenue to decline by a high-single digit percentage with adjusted EPS between $1.15 and $1.35.
AI-generated summary
Why It Matters
Nike has faced ongoing challenges in its China market, with sustained declines affecting brand revenue. This quarter marks the third round of layoffs announced by the company this year as it seeks to restructure operations amid shifting global demand and supply chain pressures.
Nike on Thursday posted a mixed fiscal first quarter and announced a restructuring plan that will lead to layoffs starting next year.
The company also offered a full-year outlook, saying it expects revenues to decline by a high-single digit percentage in fiscal 2027. Nike also said it expects adjusted earnings per share to be in a range of $1.15 to $1.35.
Shares of Nike fell roughly 3% in extended trading Thursday.
Here's what the company reported for the period compared to what analysts expected, according to consensus estimates from LSEG:
Earnings per share: 48 cents vs. 43 cents expected
Revenue: $11.21 billion vs. $11.32 billion expected
Nike reported net income of $712 million, down 2% from $727 million the year prior.
Revenue fell 4% to $11.21 billion. The retailer said Nike brand revenues took a hit largely due to sustained declines in the China business. Revenue in the market dropped 26%.
Its North America revenue came in at $5.13 billion, just above estimates of $5.11 billion, according to StreetAccount. Nike also reported gross margin of 42.8% compared to estimates of 42.4%.
The sneaker giant also announced a restructuring plan to "position Nike for long-term growth." The strategy is expected to result in layoffs beginning in 2027, though the company did not provide any further details on how many jobs it would cut.
"This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty. I don't take that lightly," CEO Elliott Hill wrote in a letter to the company.
The cuts are the third round of layoffs Nike has announced this year.
The company said it plans to focus on its supply chain modernization, organizing into three geographies, building a new campus in India and changing its work and workforce. Those geographic regions will be the Americas; the Asia Pacific and Greater China; and Europe, the Middle East and Africa.
The strategy is expected to deliver approximately $2.5 billion in savings through fiscal 2031. It'll also result in a 15-cent restructuring expense to fiscal 2027 earnings per share, the company added.
What to Watch
AI outlook — possibilities, not facts
Nike will implement layoffs beginning in 2027 as part of its restructuring plan
Very likely · Within years
Nike expects to achieve approximately $2.5 billion in savings through fiscal 2031 from its restructuring initiatives
Likely · Within years
Open Questions
- How many employees will be affected by the layoffs starting in 2027?
- What specific metrics will determine the success of the supply chain modernization and geographic reorganization?
- How will the new campus in India integrate into Nike's global operations?
