Nike Extends Its Turnaround Timeline: Revenue Down 4%, New Layoffs Coming
Nike has announced its third restructuring since 2024, Pace, with new layoffs: quarterly revenue down 4%, Converse down 28%, China down 22%. The business turnaround will take years.
Nike's first-quarter revenue fell 4% to $11.2 billion, and the company announced a new restructuring program, Pace, which will lead to layoffs next year. The quarterly report, published on Thursday, October 2, dispelled any doubts that the business turnaround will take longer than analysts expected.
What's happening with the numbers
Converse sales continued their steep decline: down 28% for the quarter. North America, previously considered a problem region, grew 2%, but that did not offset the decline elsewhere: revenue in Greater China fell 22%.
"One of the key problems is that Nike is a giant, sprawling structure, and too many of its parts continue to retreat," said GlobalData Managing Director Neil Saunders. "China and Converse are the two most obvious examples: together they account for nearly 86% of the group's net sales decline."
According to him, the Sport Offense strategy is only partially working, and in several areas Nike remains at the "tail end" of the market.
The Pace Program
Nike CEO Elliott Hill explained on a call with analysts that the Pace program is meant to "accelerate the sport offense." The plan involves consolidating geographic regions from four to three:
- Americas — combining North America and Latin America;
- APGC — combining Asia-Pacific and Greater China;
- EMEA (Europe, Middle East, Africa) — unchanged.
At the same time, the company is investing in a more flexible and modern supply chain, opening a campus in Bangalore (India), and redirecting resources toward product innovation, brand storytelling, consumer connections, and growth.
The price of the deal is jobs. Top executives on the call acknowledged that the actions to restore the business will be painful both this fiscal year and next.
Third Restructuring Without Effect
Laurent Vasilescu, senior analyst at BNP Paribas, noted that Pace is already the third restructuring program since fiscal 2024, and none has so far delivered "operating leverage." GlobalData's Saunders added that the measures themselves are correct, but all of it "resembles rearranging deck chairs on the Titanic before addressing the fundamental reasons Nike is sinking."
The company explicitly identified a "significant amount of work" in three areas: the sportswear category, the Jordan brand, and China. The forecast for the current fiscal year assumes revenue declining at a high single-digit rate.
"We know what a healthy business looks like, and we are deliberately acting to get there," Hill said.
Moved Goalposts
Two years ago, the new management promised to complete the Win Now strategy by the end of 2025, then the deadline was pushed to the end of 2026.
"On Thursday evening we heard nothing about Win Now, nor about a new timeline or new benchmarks," Vasilescu wrote. "This suggests that 'cleaning up' the business could stretch over several years."
Needham analyst Tom Nikic described visibility into the turnaround as "very low," despite early successes in running, training categories, and basketball. Air Force 1 has finally stabilized — something the company spent several quarters pursuing by managing inventory of key footwear franchises. But along with the good news came bad: the Jordan brand is in a state of oversupply, and Nike will now have to cut back on releases of retro models.
"While performance is showing green shoots, we don't believe they are enough to offset parts of the business that have neither a clear path back into positive territory nor a credible plan for getting there," said Jessica Ramírez, co-founder and managing director of The Consumer Collective. "In the sportswear category, the company feels detached from reality. At this stage, we are asking ourselves whether Elliott Hill is out of his depth with this category and the approach it demands."
Original: techtarget.com
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