Nike is planning to be a smaller company. After two straight quarters of falling revenue, Nike said it expects sales to keep declining this fiscal year and it will shrink its operations, cut jobs and merge regional businesses to adjust.

"This work will result in fewer roles across Nike," Chief Executive Elliott Hill wrote in a memo to employees. He said decisions on which jobs will be eliminated would begin in calendar 2027. "We do not yet know the number of roles or specific locations of positions."

Nike shares fell 3.7% in after-hours trading. Based on that price, Nike's shares are on place for their worst year on record, down 47% so far this year.

Hill, who started at Nike as a sales intern in 1988 and came out of retirement to become chief executive in October 2024, has spent his tenure trying to win back the retailers Nike pulled away from during a push to sell directly to shoppers. But the company has struggled with its China business-its second-biggest market after the U.S., as it failed to capitalize on a sporting boom that has boosted rivals such as On and Hoka. Hill said in a statement the company has more work to do in "Greater China," as well as in its Nike Sportswear lifestyle business and the Jordan brand. "We're taking deliberate actions to strengthen those businesses the right way for the long-term," Hill said.

In the U.S. sales were tepid, rising 2%. Dick's Sporting Goods said in September that sales of some of Nike's classic shoes had slowed. Nike Air Force 1 sneakers with classic colors like red, blue, and black had a particularly sluggish quarter, while some newer versions of the sneaker sold better, Dick's executives said. Hill has been reshaping Nike's operations. Nike cut nearly 800 warehouse jobs in January and about 1,400 corporate roles in April. Nike's chief financial officer since 2020, Matthew Friend, stepped down this summer.

The company said its new restructuring program would save about $2.5 billion through fiscal 2031. Nike expects to record roughly $1 billion in pretax charges over that period, mostly for severance and other employee costs. That is on top of about $300 million in severance it booked in its fiscal year that ended in May.

Nike now expects revenue for its fiscal year ending in May 2027 to fall by a high-single-digit percentage. In June, the company had forecast a decline only for the first half of the year. Revenue fell 4% in the recent quarter to $11.2 billion, which means Nike is projecting steeper drops in the months ahead. Profit for the quarter fell to $712 million from $727 million.