Nike's attempt to restore growth under CEO Elliott Hill is facing another test after weaker sales, continued problems in China and a deeper restructuring plan raised fresh questions about how long the turnaround will take.
Key Points
- Nike's fiscal first-quarter revenue fell 4% to $11.2 billion.
- Greater China revenue fell 26% on a currency-neutral basis.
- Nike expects revenue to decline by high-single digits in fiscal 2027.
- The company is launching a new operating transformation called Pace.
- Nike expects fewer roles as part of the restructuring, with affected job decisions beginning in 2027.
- Most savings from the broader turnaround are expected to materialize later, increasing pressure on management to demonstrate progress.
- Nike's Investor Day on November 16–17 is expected to provide more detail on the company's long-term plan.
A Turnaround That Is Taking Longer
When Nike brought Elliott Hill back from retirement in 2024, the longtime company executive was tasked with reversing a period of weaker demand, product problems and strategic changes that had weakened the sportswear giant's momentum.
Nearly two years later, Nike has made changes to its strategy, but the financial recovery remains incomplete.
The company's latest results showed revenue declining 4% year over year to $11.2 billion in the fiscal first quarter. Net income fell 2% to about $700 million, while Nike Brand revenue also declined 4%.
That performance has increased scrutiny of Hill's strategy as investors wait for clearer evidence that the restructuring can eventually restore sustainable growth.
China Remains a Major Challenge
Nike's Greater China business remains one of the company's biggest problems. Revenue in the region fell 26% on a currency-neutral basis in the latest quarter. Hill has said stabilizing China will take multiple seasons, meaning the company does not expect an immediate recovery.
Nike Is Changing Its Operating Model
Nike is responding with a broader restructuring called Pace, designed to make the company faster, more locally focused and more efficient.
The program includes modernizing Nike's global supply chain, reorganizing the company into three geographic regions, establishing a new campus in India and changing the company's workforce structure.
Nike said the changes will result in fewer roles across the company. However, the company has not yet provided a final number of affected positions, and decisions concerning impacted roles are expected to begin in 2027 and beyond.
The company says the objective is to redirect resources toward product innovation, sports, consumer connections and brand development.
The Sportswear and Jordan Problems
China is not the only challenge. Nike has also acknowledged problems in its Sportswear and Jordan businesses.
Hill has argued that Nike supplied too many retro Jordan products and relied too heavily on lifestyle products that became widely available and frequently discounted.
The company is now attempting to reduce the number and frequency of retro launches while putting greater emphasis on performance products such as running footwear.
Nike has reported encouraging momentum in parts of its performance business, but management still has to translate that progress into broader revenue growth.
Wholesale Relationships Are Being Rebuilt
One of Hill's major strategic changes has been rebuilding Nike's relationships with wholesale retailers after the company previously placed greater emphasis on selling directly to consumers. Wholesale revenue increased in North America, providing one area of progress, although total wholesale revenue still declined slightly in the latest quarter.
The Financial Outlook Is Still Difficult
Nike's latest forecast suggests the recovery will take longer than many investors may have expected.
The company expects fiscal 2027 revenue to decline by high-single digits. Nike also expects the benefits from its restructuring to arrive gradually rather than immediately.
Reuters reported that most of the savings from the overhaul are not expected to be realized until fiscal 2029 and 2030. That creates a significant gap between the costs of restructuring today and the financial benefits expected later.
Nike's first-quarter gross margin did improve by 60 basis points to 42.8%, while selling and administrative expenses fell 3%. Those figures show that cost and margin management are providing some support even as revenue remains under pressure.
Investor Day Will Be Closely Watched
Nike's Investor Day on November 16 and 17 will provide an important opportunity for Hill and his management team to explain the next phase of the turnaround.
The company says it plans to provide more details about its growth strategy, financial plan and how the Pace operating model will support its longer-term objectives.
Investors will be watching for additional information about China, product innovation, sportswear, Jordan, margins, cost savings and the timing of a return to sustainable growth.
A Long Road Back
Nike's current situation illustrates the difficulty of turning around a global consumer brand after years of strategic changes and shifting consumer preferences.
Hill has acknowledged that Nike needs to correct problems in several major businesses at the same time. The company is attempting to rebuild product innovation, strengthen relationships with retailers, improve its position in China and simplify its operations.
Those changes could take several years to fully affect Nike's financial performance. For investors, the central issue is therefore not simply whether Nike has a turnaround plan, but how quickly the company can demonstrate measurable progress while carrying the costs of restructuring.
For now, Nike's latest results show a company still in transition — with management betting that today's restructuring and product changes can create stronger growth in the years ahead.
Nike's turnaround under Elliott Hill has entered a more demanding phase, with the company restructuring its operations while investors wait for clearer evidence of a return to sustained growth.
