Nike Revenue Down As Company Signals Workforce Reduction
The company expressed confidence in its continued turnaround.
Nike's revenue for the fiscal first quarter of 2027 was $11.2 billion, a 4% decrease from the previous quarter and below Wall Street's average estimate of $11.32 billion. The athletic apparel company also hinted at workforce reductions, causing shares to drop almost 4% after its earnings release on Thursday, hitting a 10-year low.
Despite the decline, Nike expressed confidence in its recovery, including plans for reorganization and expansion in India. The company has faced criticism for its underperformance, including removal from the S&P 100 and a shift in strategy in China, which analysts consider a misstep. Nike's stock has fallen nearly 45% year to date and over 76% in the past five years.
Sales in China have decreased by 22% year-over-year. North American division revenues grew by 2% year-over-year. For the full fiscal year, Nike anticipates revenues to decline by high single digits. Wholesale revenues were $6.8 billion, down 1% from the prior quarter, primarily due to declines in Greater China and partly offset by growth in North America.
Converse, a Nike subsidiary, continued to struggle with revenues of $263 million, down 28%. Despite the earnings disappointment, Nike's CFO, Dave Denton, stated that the company met expectations, driven by improved gross margins and disciplined cost management. The company remains committed to its turnaround strategy under CEO Elliott Hill, who took office in 2024.
Analysts at Jefferies see North American growth as validation of Hill's approach, but the full-year guidance remains "weaker-than-expected" due to uneven recovery in Greater China. Nike announced today that it is implementing changes to its operating model to become more agile, serve athletes and consumers more locally, and invest more in innovation.
The reorganization, which includes repositioning the business into three geographic segments (Americas, Asia-Pacific and Greater China, and Europe, Middle East, and Africa), will result in job cuts. Hill emphasized that the company will communicate openly, act transparently, and treat affected employees with respect throughout this process.
Decisions regarding impacted roles will begin in 2027. Nike also announced plans to build a new campus in India to enhance efficiency in the region.
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