Two glass-fronted office buildings at Nike's world headquarters in Beaverton, Oregon, seen across a lake, with a small white entrance building and two flags between them, in September 2017 · Coolcaesar, via Wikimedia Commons · CC BY-SA 4.0

Article · 2026-10-02 · 8 min read · Athletic footwear and apparel · Stocks

Nike sells less and sets out Pace, a cost overhaul to 2031

Revenue for the quarter to 31 August was $11.21 billion, 4 percent less than a year earlier, with Greater China down 22 percent in dollars and 26 percent at constant currency; Nike expects a high-single-digit decline in fiscal 2027 revenue, and its Form 8-K puts Pace at about $1.0 billion of further charges, mostly severance, and about $2.5 billion of cumulative savings through fiscal 2031, with fewer roles and three regions instead of four.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

NKEdirect DKSadjacent ONONadjacent

What Nike reported

Nike reported on Thursday 1 October for the first quarter of its fiscal 2027, the three months to 31 August; its fiscal year runs to the end of May. Revenue was $11.21 billion, against $11.72 billion a year earlier: 4 percent less in dollars, and 5 percent less on the measure Nike calls currency-neutral, which recalculates the change at the previous year's exchange rates to take currency moves out. Net income, the profit left after every cost and tax, was $712 million against $727 million. Gross margin, the share of revenue left after the cost of the goods sold, was 42.8 percent against 42.2 percent, an improvement of 60 basis points, six tenths of a percentage point, which the release puts down mainly to lower warehousing and logistics costs. ^{[2, 3]}

The decline came from outside North America. Revenue there was $5.13 billion, 2 percent more than a year earlier, and sales in the region to the stores that resell Nike's goods, which Nike calls wholesale, were up 9 percent. Europe, the Middle East and Africa was down 5 percent; Asia Pacific and Latin America was down 2 percent in dollars and flat at constant currency; Greater China, taken below, shrank the most. Converse, the sneaker brand Nike owns and reports on its own, was down 28 percent, to $263 million. Nike Direct, the company's own stores, website and app, took $4.14 billion, 8 percent less, with digital sales down 13 percent and Nike's own stores down 5 percent. ^{[2, 3]}

For the whole of fiscal 2027, the year to 31 May 2027, the release says: 'Revenues are expected to decline high-single digits in fiscal 2027', that is, by a percentage in the high single digits. On the call that followed, the chief financial officer, Dave Denton, said Nike expects EBIT, earnings before interest and taxes, to decline by a greater percentage than revenue, and selling and administrative costs to stay below the previous year's. He said the second quarter carries a headwind of about 400 basis points, four percentage points, to revenue, because it is set against significant promotions in Europe, the Middle East and Africa around Cyber Week and larger shipments to North American retailers a year earlier. Reuters reported that Nike withdrew its annual forecasts in October 2024; Denton said that 'beginning today' Nike intends to give a view of the full fiscal year and update it as the year progresses. ^{[2, 7, 5]}

Where the sales went

On the call, where the company's comparisons are at constant currency unless stated otherwise, Denton described the quarter as two different realities. What Nike calls its performance business, gear made for sports such as running, tennis and golf, grew by a high-single-digit percentage after reaching $16 billion of sales in fiscal 2026, the chief executive, Elliott Hill, said. Nike Sportswear, the lifestyle line, which Hill said made up just under half of the quarter's revenue, was down by a low-double-digit percentage. Part of that was planned: Hill said Nike cut revenue from the Dunk, a Sportswear sneaker, by nearly half, which took roughly $200 million off the segment, and that some older, high-volume Sportswear shoes sold to shoppers below expectations. '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 said. ^{[7, 6, 5]}

Jordan Brand, sold under the Jumpman trademark, made up 13 percent of the business in the quarter and its revenue was down by a mid-teens percentage, Hill said. He said Nike has been 'oversupplying our iconic retro product', its classic Air Jordan designs sold again, and will reduce the volume and frequency of some retro launches, a plan discussed with its wholesale partners, with North America to feel the biggest effect in the near term. 'When consumers see the Jumpman, it should feel special, it should feel earned,' he said. The release gives no quarterly figure for Jordan. Nike's annual report puts Jordan's sales at $7.03 billion in fiscal 2026, against $7.27 billion in fiscal 2025 and $8.70 billion in fiscal 2024, a fall of 19 percent over the two years by the desk's arithmetic, the figure Sportico also gives. ^{[7, 3, 9]}

Greater China shrank the most of the four regions. Its revenue was $1.18 billion against $1.51 billion, 22 percent less in dollars and 26 percent less at constant currency. Both figures are in the release's table, and by the release's own definition the gap between them is the effect of exchange rates, which raised the dollar value of the region's sales. Reuters gave the constant-currency figure, the basis of the call; CNBC gave 26 percent without naming the measure. The region's EBIT was $248 million against $377 million, 34 percent less. Reuters reported that sales in China have now declined for nine quarters in a row and put the region at about 15 percent of Nike's annual revenue; by the annual report it was $5.85 billion of $46.40 billion in fiscal 2026, about 13 percent by the desk's arithmetic, down from $7.55 billion in fiscal 2024. ^{[2, 5, 6, 3]}

Nike says China will get worse this year, partly through its own choices. Hill said it is cutting distribution through online channels that do not fit its strategy, to reduce deep discounting, and will anchor its Nike and Jordan online sales in China on its official flagship storefronts on Tmall, JD and Douyin, alongside its own website and app; Reuters reported that from January Nike will pull online sales rights from some of its biggest retail partners there. Hill said the clean-up will take 'multiple seasons' and will weigh on revenue and profitability in China in the near term, and Denton said the outlook for the year assumes China 'actually gets worse from a revenue perspective for the balance of this year', because of actions taken now for the business's long-term health. Nike's annual report, filed in July, had already said it expected the negative impacts from Greater China and Converse to continue throughout fiscal 2027. ^{[7, 5, 3]}

Pace, by the filing

Nike set out Pace in the same Form 8-K, the report a listed company must file with the Securities and Exchange Commission within four business days of a major event, under Item 2.05, 'Costs Associated with Exit or Disposal Activities'. A company files under that item when its board commits it to a plan to wind down or dispose of part of the business, or to end jobs under a plan of termination, that will bring material charges, meaning costs recorded against profit. The SEC's form asks for a description of the plan and its expected completion date, an estimate of each major type of cost and of the total, and the part of the charge that will be paid out in cash. ^{[4, 1]}

Nike's filing gives those answers. Its board approved steps expected to bring pre-tax charges of approximately $1.0 billion, 'primarily' employee severance, the pay owed to people whose jobs end, and other employee-related costs, in addition to approximately $0.3 billion of severance recognized in fiscal 2026 under a cost plan announced in March 2026. About $0.3 billion falls in fiscal 2027 and the rest, about $0.7 billion by the desk's arithmetic, by the end of fiscal 2031, which closes in May 2031, 'subject to local law requirements'; Nike estimates that the majority will be paid out in cash. Pace covers the supply chain, 'a new campus in India', the realignment of the operating model into three geographies and further streamlining 'to reduce costs'. Nike expects about $2.5 billion of cumulative savings through fiscal 2031, the savings added up across the years, stated before the charges and before any reinvestment, and it warns that actual savings, charges and cash spending 'may differ, possibly materially'. ^{[1, 3]}

Most of the savings come late, by Nike's account. Denton said the majority should be realized in fiscal 2029 and 2030, with the program running into fiscal 2031, and that Nike intends to reinvest a portion of them in the business; Reuters reported the same timing. He said supply chain actions under Pace were already helping gross margin in the first quarter, and the release shows operating overhead, mostly wages, benefits and administration, at $2.66 billion, 6 percent less than a year earlier, mainly on lower wage-related expense and lower other administrative costs. Pace follows earlier rounds: Nike's annual report records $443 million of restructuring charges in fiscal 2024, when management 'streamlined the organization', and $385 million of employee severance costs for the whole of fiscal 2026, of which $142 million had been paid in cash by 31 May; the 8-K places the March plan's $0.3 billion in that year. Sportico described the $1 billion of employee-related costs as part of the $2.5 billion of savings; the filing gives them as separate figures. ^{[7, 5, 2, 3, 1, 8]}

Fewer roles, three regions

Nike's annual report lists four regions for the Nike and Jordan brands: North America; Europe, the Middle East and Africa; Greater China; and Asia Pacific and Latin America. Under Pace there will be three: the Americas, joining North America and Latin America; APGC, joining Asia Pacific and Greater China; and EMEA as it is today. Hill said Nike expects the teams to move into the new formation in fiscal 2028, which begins in June 2027. Sportico reported that Nike will then report Greater China inside the APGC segment rather than on its own, and that the APGC leadership team will be based in Singapore, including some positions now at the headquarters in Oregon; Fox Business also reported roles shifting from Beaverton, Oregon. The new campus is in Bengaluru, Hill said, staffed by full-time employees across a number of functions who will work with teams around the world. ^{[3, 7, 9, 10]}

Nike has not said how many jobs will go. Hill wrote to employees that the work 'will result in fewer roles across Nike', that 'news like this creates uncertainty', and that the figures shared are estimates that 'could materially change'; he added that the company does not yet know 'the number of roles or specific locations of positions'. Reuters, CNBC and Fox Business all reported that the decisions on jobs begin in 2027. Nike told Fox Business that where consultation with employee representative bodies is required, it will not finalize decisions until that is complete. The annual report counted about 73,000 employees on 31 May 2026, retail and part-time staff included, and Fox Business reported that in April Nike announced about 1,400 layoffs in its Global Operations team, just under 2 percent of its workforce. ^{[6, 10, 5, 3]}

What settles it next

Nike's investor day on 16 and 17 November, where Fox Business reported Nike will give more detail on the restructuring and Denton said it will set out its long-term financial objectives, with a view of the next five years; Reuters reported that Hill said the company will update its targets through the year, starting in November. In January, by Reuters' account, the change to online selling in China. In 2027, the first decisions on jobs. From June 2027, the start of fiscal 2028, the three regions and, by Sportico's report, the end of a separate figure for Greater China. And the charges, about $0.3 billion of them in fiscal 2027 and the rest through fiscal 2031, with the savings Nike expects mostly in fiscal 2029 and 2030. ^{[10, 7, 5, 9, 1]}

Who it reaches

Nike directly, Converse included. Dick's Sporting Goods, which Sportico names among the retailers that carry Nike's shoes and have said they need to clear excess stock of casual shoes: Nike's sales to retailers in North America were up 9 percent in the quarter, Hill said the cut in Jordan retro supply was discussed with wholesale partners and will be felt most in North America, and Nike's annual report says its three largest customers in the United States took about 29 percent of its sales there in fiscal 2026, without naming them. On Holding, the Swiss rival that Reuters reported Kylian Mbappe joined in September after ending a two-decade partnership with Nike, and which Sportico names, with Hoka, among the brands that gained ground when Nike pulled out of major retailers under its previous chief executive. Hoka and China's Li Ning, both named by Sportico, and Tmall, JD and Douyin, the platforms where Hill said Nike's online sales in China will be anchored, are named here and not tagged: the sources read here do not say what the changes mean for their sales. ^{[2, 8, 7, 3, 5]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

All news →