Nike Plunges

Nike shares fell sharply Friday, a second straight drop after the company reported weaker revenue and new layoff plans.

The stock was down about 6% in morning trading, CNBC reported. It has lost nearly 45% of its value since the start of the year. Shares had already slid 8.5% in extended trading Thursday night, according to Business Standard and RTE.

Fiscal first-quarter revenue fell 4% to $11.2 billion, CNBC reported, citing weakness in Greater China that growth in North America only partly offset. Net income dropped to $712 million from $727 million a year earlier.

China is the deeper problem. Sales there fell 26% on a constant-currency basis in the quarter, the ninth straight quarterly decline, RTE reported. The region makes up about 15% of Nike's revenue and ranks as its third-largest market. Starting in January, Nike will strip online sales rights from some of its biggest Chinese retail partners, a move Business Standard said is meant to tighten control over pricing. CEO Elliott Hill warned the cleanup will take "multiple seasons" and hurt near-term profit, according to RTE.

"Our Nike performance business is not yet large enough to offset the pressure we're seeing in Nike sportswear, Jordan brand, and Greater China," Hill told analysts on a post-earnings call, RTE reported. He pointed to a planned cut in Jordan retro launches as one fix.

Nike is also rolling out a new operating model called "Pace," aimed at $2.5 billion in savings through 2031, CNBC reported. Most of the savings will land in fiscal 2029 and 2030, Business Standard reported. The plan folds Nike's four geographic regions into three: Americas, Asia Pacific and Greater China, and EMEA. It also adds a new campus in India. Layoffs begin in 2027. Nike has not said how many jobs will go, RTE reported. The company has already cut staff twice this year. It eliminated 775 jobs at U.S. distribution centers in January, then cut 1,400 roles, mostly in tech, in April, CNBC reported.

Nike expects revenue to decline in the high single digits in fiscal 2027. Analysts polled by LSEG had forecast a roughly 2% drop, Business Standard reported.

Not everyone is sold on the fix. "There is nothing inherently wrong with the restructuring plans, but they do suggest that Nike's current model is not really fit for purpose," said Neil Saunders of GlobalData, according to RTE.

BNP Paribas analyst Laurent Vasilescu put it more bluntly. "Nike does not have a channel problem in China," he said, "but rather a product problem."