Nike shares fell more than 10% in premarket trading Friday, extending Thursday's slide after the company forecast high-single-digit revenue declines for 2027 and outlined a restructuring that will cut jobs starting in two years.
Revenue misses and a shrinking top line
Fiscal first-quarter revenue came in at $11.2 billion, down 4% from the same period a year earlier. The decline was driven by Greater China, where sales fell, while North America provided a partial offset. Net income slipped 2% to $712 million from $727 million. The stock has now lost nearly 45% of its value since January.
The cost program is the new growth story
Management unveiled "Pace," an operating model targeting $2.5 billion in cost savings by 2031. The plan includes reorganizing the supply chain into three geographies, opening a new campus in India, and streamlining the organization. Job cuts tied to the program will begin in calendar 2027, adding to the 775 distribution-center roles eliminated in January and the 1,400 technology positions cut in April. "This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty," CEO Elliott Hill said in a separate announcement Thursday.
Citi sees no premium multiple justification
Citi analysts kept a neutral rating, writing that Nike is "turning into a cost-cutting story" as management adapts to "significant pressure within Sportswear, Jordan, and China." They noted that details on when Pace will actually move the dial will not arrive until 2029, and that there is "no justification for Nike to receive a premium multiple versus its growing peers." The firm added that beating the new guidance is not out of the question, but the bar has been set low enough that the market is pricing for execution risk, not upside.