Nike has launched a major cost-cutting initiative and realigned its worldwide business structure, targeting annual savings of $2.5 billion by 2031 amid shrinking sales in China and broader market pressures. CEO Elliott Hill revealed the restructuring plan after revenue fell short of expectations, with forecasts now predicting a high single-digit annual sales decline next year. The savings will stem from global workforce reductions and operational reorganization, with Hill emphasizing that these measures follow a broader crisis in China’s market and a stagnation in product innovation. These cuts, combined with previous layoffs, aim to deliver the full $2.5 billion in savings by the 2031 fiscal year.
The overhaul consolidates Nike’s operations into three primary regions: EMEA, Asia-Pacific, and Greater China, as well as the Americas. While the company has not disclosed exact workforce reductions, affected employees will receive notifications beginning in 2027. Nike will also regain control of online sales in China by January, a decision expected to strengthen pricing discipline but reduce near-term profitability. The restructuring includes expanding Nike’s talent development center in India.
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China continues to pose the most significant challenge. Sales there have declined for nine consecutive quarters, including a 26% drop in the first quarter of the current year. Hill identified the issue not as distribution problems but as a shortage of innovative products, particularly within the Jordan brand, which has seen revenue decline. To address this, Nike will reduce the number of Jordan re-releases and prioritize core sports categories such as running, where demand remains more stable. The company is also shifting focus toward strengthening ties with wholesale partners and emphasizing performance-driven categories to counter stagnant growth.
Despite these difficulties, Nike reported an improvement in gross margins, rising to 42.8% due to lower logistics and inventory expenses. However, first-quarter sales still decreased by 4%, totaling $11.21 billion. The company’s removal from the S&P 100 index last month highlighted its financial struggles. Even in the U.S., where sales grew by 2% thanks to World Cup-related demand, losses in China and weaker Jordan performance canceled out those gains.