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Nike shares dropped Friday, falling for a second straight day after the company reported declining revenue and plans to lay off staff in 2027. The sportswear giant said Thursday that its fiscal first-quarter revenues were down 4% to $11.2 billion, citing declines in Greater China, which was partially offset by growth in its North America segment. Its net income was $712 million, down 2% from $727 million the previous year. "We have more work to do in NIKE Sportswear, Jordan Brand and Greater China, and we're taking deliberate actions to strengthen those businesses the right way for the long term," Nike President and CEO Elliott Hill said in the release. Nike expects revenues to decline in the high-single digits in 2027. Its shares were last down about 6% in morning trading on Friday and have declined nearly 45% since the beginning of the year. The company also announced its new operating model "Pace," which is expected to deliver $2.5 billion in cost savings by 2031, with plans to lay off more staff starting in 2027. "This work will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty. I don't take that lightly," Hill said in a separate announcement on Thursday. "Decisions about impacted roles related to this work will begin in calendar year 2027 and beyond." The program also includes efforts to modernize Nike's global supply chain, organizing into three geographies, establishing a new campus in India, and further streamlining the organization to reduce costs. 'Cost cutting story' Nike has already carried out layoffs twice since the beginning of the year, including cutting 775 jobs across its U.S. distribution centers in January, and letting go of a further 1,400 employees primarily in its tech division in April. Citi analysts said in a note Friday that they will remain "neutral" on the company as its sales guidance came in below market expectations. "Nike is turning into a cost-cutting story, announcing a $2.5bn cost savings program as management is adapting to the reality of significant pressure within Sportswear, Jordan, and China," the Citi analysts said. They noted that management will offer more detail on its five-year outlook at their investor day, but details around when Pace will actually "move the dial" will only come in 2029. "It isn't out of the question that Nike can beat some of the guidance they just provided, but there really is no justification (in our view) for Nike to receive a premium multiple versus its growing peers," they added.
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