Nike's market value has plunged $230B from its peak
What's the story
Nike's shares crashed by a staggering 8.5% in after-hours trading on Thursday to $32.20. The fall was triggered by the company's disappointing fiscal first-quarter results and an even bleaker outlook for the future. For the quarter ending August 31, Nike reported revenues of $11.2 billion, a 4% decline from last year and below analyst expectations. Already down more than 44% this year, Nike shares continue their bruising slump as CEO Elliott Hill works to engineer a turnaround.
Financial forecast
Bleak outlook for fiscal 2027
Nike's profit also took a hit, falling 2% to $712 million.
The company's outlook for fiscal 2027 isn't promising either. It expects revenue to decline by a high-single-digit percentage, much worse than the 2.4% decline analysts had expected.
This would mark the lowest annual sales for Nike since the fiscal year ending May 2020.
Corporate changes
Nike to implement restructuring plan, including job cuts
In light of these challenges, Nike has announced a restructuring plan that will include job cuts starting in 2027.
The company said it would reorganize its business and consolidate geographic divisions as part of the effort.
The move is expected to generate $2.5 billion in savings over five years, with about $1 billion in pretax charges from the plan, according to CNBC.
Market struggles
Merging of geographic divisions
Greater China, which has seen nine straight quarters of declining sales, will be merged with the Asia Pacific region. Latin America will now be combined with North America.
Meanwhile, China's revenue fell by 26% last quarter due to local competition and rising consumer preference for domestic brands.
Brand performance
Other business segments under pressure
Nike's Sportswear business, which includes fashion shoes and apparel, reported a low-double-digit sales decline last quarter.
The Jordan brand has also been underperforming, prompting Nike to reduce the volume and frequency of some retro product launches.
Meanwhile, Converse has recorded 14 consecutive quarters of falling sales.
According to The Kobeissi Letter, Nike has lost roughly $230 billion in market value from its peak, with shares down about 80% since 2021.