Nike Plummets on Weak Revenue Outlook and Layoff Plans

Nike's shares took a significant hit in premarket trading on Friday, plummeting by over 10% after the sportswear giant reported weak revenue growth and laid out plans to cut costs.

The company's fiscal first-quarter revenues declined by 4% to $11.2 billion, with Greater China being a major contributor to this decline. However, Nike's North America segment saw some growth, which partially offset the losses in Asia.

Nike President and CEO Elliott Hill acknowledged that the company still has work to do in key areas like NIKE Sportswear, Jordan Brand, and Greater China. He stated that the company is taking 'deliberate actions' to strengthen these businesses for the long term.

The sportswear giant also announced its new operating model 'Pace,' which aims to deliver $2.5 billion in cost savings by 2031. As part of this plan, Nike will lay off staff starting from 2027, with Hill expressing regret for the uncertainty this may cause employees.

Citi analysts have expressed a neutral stance on the company, stating that sales guidance came in below market expectations. They noted that Nike's focus is shifting towards cost-cutting measures, and management will provide more details about its five-year outlook at an investor day.