Nike shares fell sharply in premarket trading, dropping 10.36% on Friday following the company's announcement of declining revenues and plans for significant layoffs beginning in 2027 [1]. The sportswear giant reported a 4% decrease in fiscal first-quarter revenues to $11.2 billion, attributing the decline primarily to weaker performance in Greater China, partially offset by growth in North America [1]. Net income also slipped 2% year-over-year to $712 million from $727 million [1].
Nike revealed that it expects revenues to decline in the high-single digits in 2027, and its shares have now fallen nearly 45% since the start of the year [1]. The company introduced a new operating model called "Pace," targeting $2.5 billion in cost savings by 2031, which includes plans to lay off more staff starting in 2027 [1]. CEO Elliott Hill acknowledged the uncertainty created by these workforce reductions, stating that decisions about impacted roles will begin in calendar year 2027 and beyond [1].
The "Pace" program also aims to modernize Nike's global supply chain, reorganize operations into three geographies, establish a new campus in India, and further streamline the organization to reduce costs [1]. Nike has already executed two rounds of layoffs in 2026, cutting 775 jobs in U.S. distribution centers in January and an additional 1,400 employees, mainly in its tech division, in April [1].
Citi analysts responded to the news by maintaining a "neutral" rating on Nike, noting that the company's sales guidance was below market expectations [1]. They described Nike as increasingly becoming a cost-cutting story and indicated that more details on the five-year outlook would be provided at the upcoming investor day, with meaningful impact from the "Pace" program not expected until 2029 [1]. The analysts also commented that there is little justification for Nike to receive a premium valuation compared to its faster-growing peers [1].
CONCLUSION
Nike's disappointing revenue outlook and announcement of future layoffs have triggered a sharp sell-off in its shares, reflecting investor concerns about ongoing challenges in key markets and the company's reliance on cost-cutting measures. With further details on its strategic plan expected at the investor day and significant impact from the new operating model not anticipated until 2029, market sentiment remains cautious.