Nike's Disappointing Earnings Trigger Layoffs, Asia-Pacific Supply Chain Pressured
Nike's disappointing first-quarter earnings have triggered layoffs and a new operating model transformation program called 'Pace', aiming to generate cumulative savings of approximately $2.5 billion through fiscal 2031.
The company reported a 4.3% year-over-year decline in revenue, with all regions except North America posting declines. Greater China was the weakest region, with a 22% revenue decline and a sharp deterioration from the 13% decline in the prior quarter.
Nike CEO Elliot Hill acknowledged that the company 'must make changes to become a more agile, more efficient, and more athlete-centric company', which will result in layoffs across Nike teams. The company plans to establish a new campus in Bengaluru, India, positioning it as a long-term investment in new capabilities and talent.
Goldman Sachs views Nike's results and outlook as 'negative to mixed' for the Asia-Pacific textile, apparel, and footwear supply chain, with OEMs and retailers facing visible pressure. The firm maintains Buy ratings on Shenzhou International (02313.HK), Yue Yuen Industrial (00551.HK), and Stella International (01836.HK), citing inexpensive valuations and strong shareholder returns.