This sportswear giant said it will begin layoffs next year, as a lowered business outlook sent shares falling.

Nike expects revenue to decline by a high single-digit percentage in the fiscal year ending May 2027.

Overview

After two consecutive quarters of declining revenue, Nike plans to shrink its operations, cut jobs, and consolidate regional businesses.

Nike is preparing to reduce its corporate footprint. Following two straight quarters of falling revenue, the company said sales will continue to decline this fiscal year, and it will scale back operations, cut jobs, and merge regional units to adjust.

In an internal memo to all employees, CEO Elliott Hill wrote: "This overhaul will result in a reduction in the number of roles at Nike." He said decisions on layoffs will take effect in 2027. "At this point, we do not yet know the exact number of layoffs, nor can we determine which regions the affected roles will be in."

In premarket trading on Friday, Nike (NYSE: NKE) shares fell about 9%. At that price, Nike is on track for its worst year ever, with shares down about 50% year to date.

Hill joined Nike as a sales intern in 1988 and returned as CEO in October 2024. During his tenure, he has worked to repair relationships with retailers — after Nike's aggressive push into direct-to-consumer sales alienated many retail partners. But the company is struggling in China, its second-largest market outside the U.S., failing to capitalize on the sports consumption boom, while competitors such as On and Hoka have seized the momentum for growth.

In a statement, Hill said there is still a great deal of work to be done in Greater China, Nike's Sportswear line, and the Jordan brand. "We are taking deliberate steps to shore up these business areas in the right way for long-term development."

Sales in the U.S. home market were lackluster, with revenue rising only 2%. Dick's Sporting Goods said in September that sales of some classic Nike shoe styles had slowed. Dick's executives said Air Force 1 models in classic colorways such as red, blue, and black were particularly weak this quarter, though some newer versions of the shoe performed better.

Hill has been reshaping Nike's operating system. In January, Nike cut nearly 800 warehouse jobs, and in April it eliminated about 1,400 corporate roles. Chief Financial Officer Matthew Friend, who took the job in 2020, left this summer.

The company said the new restructuring plan is expected to save about $2.5 billion in costs by fiscal 2031. During this period, Nike expects to incur about $1 billion in pre-tax charges, mainly for severance and other personnel-related costs. That does not include about $300 million in severance costs already recorded in the fiscal year ended in May.

Nike now forecasts that revenue will decline by a high single-digit percentage in the fiscal year ending May 2027. In June, the company had projected a decline only in the first half of the fiscal year.

In the most recent quarter, revenue fell 4% to $11.2 billion, meaning Nike expects the revenue decline to widen further in the coming months. Profit for the quarter fell to $712 million from $727 million.