Nike continues to struggle in the Chinese market. The company announced its latest financial report on Thursday (October 1st), showing a 26% year-on-year revenue decline in the Greater China region, which includes Mainland China, Hong Kong, Macau, and Taiwan, calculated at fixed exchange rates. This decline marks the ninth consecutive quarter of decrease. Concurrently, Nike has revealed plans for a new round of restructuring and layoffs, with notifications to affected employees expected to begin in 2027.
In the first quarter of the 2027 fiscal year ending on August 31, Nike reported a revenue of $11.21 billion, a 4% decrease compared to the same period last year, falling short of analysts’ expectations of $11.32 billion. The net profit was $712 million, a 2% decline, with earnings per share at 48 cents.
The Greater China region stands out as one of Nike’s weakest performing major markets. The revenue for the first quarter dropped from $1.512 billion to $1.180 billion compared to the same period last year, representing a 22% decline at actual exchange rates and a 26% decline at fixed exchange rates. Wholesale business saw a 31% decline at fixed exchange rates.
In contrast, Nike’s largest market in North America saw a 2% growth at fixed exchange rates, emphasizing the significant downturn in the Greater China region.
Nike has been facing tough competition in China from international brands like Adidas and local Chinese sportswear brands in recent years. The company is adjusting its sales channels and planning to regain control over online sales rights from some major retail partners starting from January next year to strengthen control over pricing and distribution channels.
Elliott Hill, Nike’s CEO, stated that the growth in performance products is still insufficient to offset the weaknesses in Nike Sportswear, Jordan Brand, and the Greater China business, emphasizing that improvements in these segments will take time.
Nike-owned Converse also showed weak performance, with a 28% decline in revenue for this quarter.
Nike has also announced the initiation of a new restructuring plan called “Pace,” including streamlining the organization, reforming the global supply chain, and readjusting the global regional structure.
This restructuring will lead to a new round of layoffs. Nike has not disclosed how many positions or which regions will be affected, but notifications to relevant employees are expected to start from 2027. This is not the first time the company has downsized this year; in January, Nike announced the elimination of 775 positions in the United States, mainly involving distribution centers.
The company anticipates that the “Pace” plan will accumulate cost savings of approximately $2.5 billion by the 2031 fiscal year, while generating around $1 billion in pre-tax expenses.
Nike projects a significant high single-digit percentage decline in full-year revenue for the 2027 fiscal year, notably worse than the analysts’ previous estimate of around 2% decline. Following the financial report release, Nike’s stock price fell by approximately 4% in after-hours trading on Thursday.