Nike To Overhaul Operations, Plans New India Campus and Further Job Cuts Amid Global Restructuring

Nike is making significant changes to its global operations, with a focus on restructuring and downsizing, as the company grapples with weak performance in China. On Tuesday, Nike's shares dropped by 8.5% in after-hours trading following the release of a forecast indicating a high-single-digit decline in revenue for fiscal 2027, which is considerably lower than what analysts had anticipated.

Following a report by Reuters, the company disclosed a 26% decline in sales, when adjusted for currency fluctuations, in China during the first quarter. This decline has put additional pressure on Nike, which has been trying to revive growth under the leadership of CEO Elliott Hill since the beginning of his tenure two years ago.

Hill's strategy has primarily centered on sports such as running and rebuilding ties with wholesale retailers. However, analysts have highlighted a lack of fresh and appealing products, as well as a reliance on increased promotions and discounts, as ongoing challenges for the business.

Hill acknowledged that Nike's performance sector is not currently large enough to offset the weakness in Nike Sportswear, the Jordan brand, and Greater China. He also mentioned that rebuilding these businesses would require time and effort, including a deliberate reduction in Jordan retro launches. Additionally, the company missed analysts' estimates for first-quarter revenue and announced modifications to its operating structure.

In an effort to streamline Nike's global operations, the company plans to reorganize them into three regions: the Americas, Asia Pacific, and Greater China, replacing the previous four regions. As part of this restructuring, Nike intends to establish a new campus in India, which will provide robust capabilities and access to talent.

However, the number of positions that will be eliminated as part of the restructuring has not been determined yet. Those affected by the latest changes will be informed in 2027. This program builds upon previous workforce reductions and is projected to result in approximately $2.5 billion in savings throughout fiscal 2031, with the majority of savings anticipated in fiscal 2029 and 2030.

The restructuring efforts come as Nike seeks to revive growth in the face of ongoing challenges in China and pressures across several of the company's major businesses.