Nike Stock Plummets Amidst Revenue Miss and Layoff Plans

Nike Inc. experienced a significant stock price decline, falling more than 8% in premarket trading on Friday morning, following the release of disappointing first-quarter financial results and the announcement of impending job cuts. The athletic apparel and footwear giant reported revenue of $11.21 billion for the quarter, a 4% decrease compared to the same period last year. This figure fell short of Wall Street's expectations, which had projected revenue of $11.32 billion, according to consensus estimates cited by CNBC. Despite the revenue miss, Nike did surpass earnings per share predictions, reporting 48 cents per share against an expected 43 cents. Over the past 12 months, Nike's stock (NYSE: NKE) has seen a substantial drop, plummeting more than 52% as of Thursday's market close.

Beyond the immediate financial report, Nike revealed plans to implement a new operating model in calendar year 2027, which will involve significant workforce reductions. Elliott Hill, president and CEO of Nike, communicated this decision, acknowledging the uncertainty it creates for employees. While the exact number of roles to be eliminated and their specific locations have not yet been determined, Hill emphasized the need for Nike to become a more agile, efficient, and athlete-focused company to thrive in the future. He stated that "changes to operating model" are on the horizon and that the company must "move faster, serve athletes and consumers more locally, and invest more aggressively in innovation." This strategic shift aims to streamline operations and enhance responsiveness to market demands.

This announcement follows earlier workforce reductions, as Nike confirmed approximately 775 job cuts in the United States in January. The new operating model also entails a restructuring of Nike's customer base into three distinct geographic regions: Americas, APGC (Asia Pacific and Greater China), and EMEA (Europe, the Middle East, and Africa). As part of this global realignment, the company plans to establish a new Nike campus in Bengaluru, India. Furthermore, the strategy includes a continued focus on "supply chain modernization," a process that has been underway for over a year and is reportedly showing "considerable progress," according to Hill. These comprehensive changes underscore Nike's efforts to adapt to evolving market dynamics and competitive pressures within the global sportswear industry, aiming to improve operational efficiency and innovation capabilities.