Nike Slumps on Disappointing Sales and Layoffs

Nike's shares dropped by around 3% in extended trading on Thursday after the company posted disappointing sales and announced layoffs as part of a restructuring plan. The retailer reported a mixed fiscal first quarter, with earnings per share coming in at 48 cents, below expectations of 43 cents. Revenue fell 4% to $11.21 billion, with the Nike brand experiencing sustained declines in China, where revenue dropped by 26%. The company's North America revenue was slightly higher than expected at $5.13 billion.

Nike CEO Elliott Hill acknowledged that the company is 'moving with urgency' to improve its business in China and said that it would take time to see the full benefits of the restructuring efforts. He noted that the sportswear segment, which accounts for nearly half of the quarter's revenue, fell by a low-double digit percentage due to a lack of energy in the lifestyle space.

The company plans to focus on supply chain modernization and reorganizing into three geographic regions: the Americas, Asia Pacific and Greater China, and Europe, the Middle East and Africa. This restructuring plan, dubbed Pace, is expected to deliver approximately $2.5 billion in savings through fiscal 2031.

Nike has been facing increased macroeconomic pressure due to geopolitical tensions and higher inflation, leading to slower spending by consumers. The company's shares have plummeted more than 40% this year, making it one of the worst performers in the market.