Nike shares sink 10% after weak outlook and 2027 layoff plans

Nike shares dropped 10.36% in premarket trading Friday, extending losses into a second straight day and leaving the stock down nearly 45% since the beginning of the year. The slide followed the company's fiscal first-quarter results, which showed revenue falling 4% to $11.2 billion and net income slipping 2% to $712 million from $727 million a year earlier.

The sportswear maker told investors to expect revenue to decline in the high-single digits in 2027. Weakness in Greater China drove much of the first-quarter revenue decline, though growth in North America partially offset it. President and CEO Elliott Hill said the company has "more work to do" in NIKE Sportswear, Jordan Brand and Greater China, adding that Nike is taking deliberate actions to strengthen those businesses for the long term.

Alongside the results, Nike announced a new operating model called Pace that is expected to generate $2.5 billion in cost savings by 2031. The plan includes modernizing its global supply chain, organizing the company into three geographies, establishing a new campus in India and further streamlining the organization to reduce costs. Layoffs tied to the program will begin in calendar year 2027 and beyond, according to the company.

Hill acknowledged the job cuts in a separate announcement, saying the work will result in fewer roles across Nike and that news of this kind creates uncertainty. The company has already carried out layoffs twice this year, cutting 775 jobs at 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 Friday they would remain "neutral" on Nike, noting that its sales guidance came in below market expectations. They described Nike as turning into a cost-cutting story as management adapts to pressure in Sportswear, Jordan and China, and said more detail on the five-year outlook would come at an investor day, with clarity on when Pace will actually "move the dial" not arriving until 2029. The analysts added that Nike could beat some of the guidance it just provided, but they saw no justification for the stock to receive a premium multiple versus its growing peers.