Nike targets $2.5 billion in cost cuts and plans layoffs after quarterly sales drop 4%
The sports apparel maker announced its multi-year Pace turnaround program following a 22% revenue drop in Greater China, projecting full-year sales to fall by high-single digits while expanding into India.
The Pace restructuring plan
Nike announced a multi-year restructuring initiative called "Pace" designed to reduce operating costs by $2.5 billion by 2031. Chief Executive Elliott Hill unveiled the plan following the release of quarterly financial results on Thursday evening. Under the program, the company plans to modernize its supply chains, slim down internal management, and establish a new corporate campus in Bengaluru, India. Nike expects to incur approximately $1 billion in total restructuring charges through 2031, with the majority of those costs tied to workforce adjustments. The sportswear company previously allocated about $300 million for severance packages in the 2025/26 fiscal year and set aside an additional $300 million for the current fiscal year ending in May 2027.
- FY 2025/26 severance allocation
- 300 $M
- FY 2026/27 severance allocation
- 300 $M
- Total restructuring costs through 2031
- 1000 $M
- Total cost savings target through 2031
- 2500 $M
Workforce adjustments and international expansion
The restructuring will result in job cuts across several departments, though Nike did not disclose an exact headcount figure. Decisions regarding specific role reductions are scheduled to begin during calendar year 2027 and continue in subsequent years. In a message sent to staff members, Hill noted consumer spending caution and acknowledged the internal disruption caused by the reorganization.
These shifts will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty.
The planned corporate campus in Bengaluru represents a long-term investment intended to expand capabilities and support athletic talent globally.
Financial results and geographic divergence
During the first quarter of fiscal 2027, which ended on 31 August 2026, Nike generated $11.2 billion in revenue, marking a 4% decline compared to the previous year. Quarterly net profit dropped 2% to $712 million, while diluted earnings per share landed at $0.48, down from $0.49 a year earlier but ahead of the $0.43 projected by consensus analyst estimates. Regional performance diverged sharply across international markets. Greater China recorded a 22% drop in revenue to $1.2 billion, while North America posted a 2% revenue increase, making it the only market to avoid contraction. Chief Financial Officer Dave Denton told investors that the quarterly outcome met internal corporate targets.
- Elliott Hill rejoins Nike as chief executive
- Nike closes first fiscal quarter of 2027 with $11.2 billion in revenue
- Nike begins implementation of workforce role reductions
- Target completion for $2.5 billion in cumulative cost savings
Strategic pivot and revenue guidance
Hill rejoined Nike in October 2024 to steer the business away from an over-reliance on direct-to-consumer distribution, which had reduced product availability in traditional retail stores and allowed competitors to secure shelf space in the United States. The turnaround plan shifts attention back toward athletic performance and core sports apparel, Jordan brand merchandise, and promotional partnerships such as women's basketball player Caitlin Clark.
We're building Nike for the long term.
For the full fiscal year ending in May 2027, Nike projected that sales will decline by high-single digits. Full-year earnings per share are forecast between $1.15 and $1.35 before accounting for an additional $0.15 per share cost from the Pace program. Neil Saunders, managing director of GlobalData, described the revenue forecast as shabby, pointing to heightened competition from rival brands. Following the disclosure, Nike shares dropped by roughly 4% in after-hours trading in the United States.
