Nike warned investors on Thursday to expect layoffs, weaker profitability, and fewer Jordan launches as its stock fell to a 13-year low. The company finished the regular trading session with a market capitalization of $53 billion, down from $264 billion at its November 2021 peak, and then dropped another 9% in after-hours trading.
Management used its latest earnings report to lay out several steps aimed at stopping the slide. Those measures include winding down online discount channels in China, cutting jobs, and reducing retro product launches.
Quarterly results and guidance missed the market mood
Revenue for Nike’s most recent fiscal quarter fell 4% to $11.2 billion, below the $11.3 billion consensus. Profit came in at $0.48 per share, ahead of estimates in the $0.43-$0.44 range.
That was not enough to calm investors. Nike said full-year sales would decline by a high-single-digit percentage and forecast adjusted earnings of $1.15-$1.35 per share, well below the $1.68 analysts had projected.
Jim Cramer, who had defended the stock for years on CNBC, sided with disappointed investors, writing: 「Nike guide horrendous.」
China, Converse, and Jordan all weakened
Greater China, once one of Nike’s main growth engines, fell 26% on a currency-neutral basis. Nike said it would wind down most of its online discount channels in the region. CEO Elliott Hill said: 「The majority of our partners’ physical doors in Greater China haven t been refreshed in the past seven years.」
The weakness was not limited to China. Converse revenue dropped 28% to $263 million, with declines across every region. Nike’s own digital sales fell 13%.
Jordan, which accounted for 13% of company revenue last quarter, also posted a decline of roughly the same size. Hill said: 「Simply put, we’ve been oversupplying our iconic retro product,」 and the company now wants to offer fewer, rarer retro releases.
Pace restructuring targets $2.5 billion in savings
Nike executives also introduced Pace, a layoff and restructuring program that the company said would deliver cumulative savings of $2.5 billion by 2031.
The overhaul includes a new India campus and a plan to fold four sales regions into three. Layoffs are set to begin in 2027.
Nike had already reduced headcount earlier this year. It cut 775 distribution center jobs in January and announced about 1,400 additional layoffs in April, mostly in technology roles.
Index standing has also deteriorated
With the stock back at September 2013 levels, the S&P Dow Jones index committee removed Nike from the S&P 100 this month, effective September 21, ending an 18-year run in the index.
Nike remains in the Dow Jones Industrial Average, but its weight is just 0.4%, the smallest among the index’s 30 constituents.
The article also cited crypto influencer Threadguy, who commented on Nike’s fading popularity by saying: 「Go to the gym and count how many people are wearing Nike shoes. Pretty alarming.」