Nike announces $2.5 billion cost-cutting plan and job reductions as sales slide across key markets

Overhaul plan and quarterly earnings

Nike announced a new cost-cutting program named Pace aimed at saving $2.5 billion by mid-2031 as the company grapples with declining sales. The plan includes additional job cuts, supply chain modernization, a new corporate campus in India, and organizational streamlining. In the most recent quarter, revenue fell 4% year-over-year to $11.2 billion, while net income fell 2% to $712 million. For the fiscal year ending in May 2027, the company forecasts a high single-digit percentage decline in sales, exceeding analyst projections. Most of the financial savings from the overhaul are not expected to materialize until fiscal 2029 and fiscal 2030. Chief Executive Officer Elliott Hill asked investors for patience as the sportswear maker attempts to stabilize its operations.

“We need to do more in Nike sportswear, the Jordan brand, and in China. And we are taking steps to strengthen these businesses for the long term.”

Wholesale shift and product strategy

The current challenges follow strategic decisions implemented under former Chief Executive Officer John Donahoe, who led Nike from 2020 to 2024. During the COVID-19 pandemic, Nike severed partnerships with traditional wholesale retailers to prioritize direct sales through its digital channels. The strategy initially generated higher profit margins, but it eventually removed Nike inventory from physical store shelves. Competitors such as Adidas, On, and Hoka filled the vacated display spaces in retail outlets and specialty running shops. In addition, Nike directed research and development budgets into digital operations rather than new product innovation, while flooding the market with once-limited Jordan releases.

“The job cuts and associated cost-cutting will buy time and may support margins and the bottom line - but these things are not the solution to the brand problems that are the cause of decline.”

Regional declines and athlete departures

Nike faces mounting headwinds in China, its second-largest market, where sales dropped by nearly 25% due to a lack of localized product designs and competition from domestic brands like the Anta Group. In contrast, Adidas gained market share in China by partnering with local designers on cultural trends like Guochao and projecting up to 10% global sales growth for the year. Nike has also experienced high-profile departures from its sponsored athlete roster. Real Madrid soccer forward Kylian Mbappé ended his 20-year association with Nike to join Swiss brand On, following previous departures by tennis player Roger Federer, soccer player Lamine Yamal, and golfer Tiger Woods. US import tariffs on goods manufactured in Asia and broader inflation pressures have added further strain to consumer spending on sportswear.

Nike46.3

Adidas27

Nike

46.3 $ billion

Adidas

27 $ billion

Data from the article text

Market valuation and investor outlook

Following the earnings disclosure, Nike shares dropped approximately 10% in premarket trading on Friday to around $31.58, reaching their lowest level in 12 years. The stock has dropped roughly 75% to 80% from its November 2021 peak of $175 per share, wiping out hundreds of billions of dollars in equity value. In September 2026, the company was removed from the S&P 100 index after 18 years of inclusion. While Nike generated $46.3 billion in revenue in 2025 compared to $27 billion for Adidas, maintaining market leadership has grown increasingly challenging under current industry conditions. Investor focus now turns to Nike's upcoming investor day scheduled for 16 November and 17 November 2026, where management is expected to present a detailed recovery roadmap.