Nike's Turnaround Stalls as Sportswear, Jordan, and China Declines Deepen

Key points

• Nike’s sportswear segment fell low double digits in the latest quarter, driven by product underperformance and a deliberate 50% cut in Dunk revenue that removed $200 million from the top line.
• The Jordan Brand, which generated $8.7 billion in fiscal 2024, saw revenue drop roughly 20% by the end of fiscal 2026, with recent retro launches trading at discounts due to oversupply.
• Greater China revenue declined 22% in the start of fiscal 2027, following consecutive years of drops; Nike is consolidating its fragmented digital storefronts into fewer platforms to improve brand presentation.
• Nike announced additional unspecified layoffs for the coming year as part of its 'Pace' restructuring, following earlier cuts of 2% and then less than 1% of the workforce.
• Bright spots include the Studio Fleece line, which was the best-performing apparel collection, and stable full-price sales for the Air Force 1, though these do not offset broader losses.

Background

This latest earnings report follows the announcement of the 'Pace' restructuring plan in October 2026, which aimed to save $2.5 billion by 2031 and consolidate Nike’s four geographic regions into three. The company also recently established a new global campus in Bengaluru, India, to offset China’s revenue plunge. Previous coverage noted that Nike’s stock had hit a 12-year low, triggering a sector-wide sell-off among rivals like Lululemon and On. The current report highlights that despite these major structural changes, the core issues of oversupply and market share loss in key categories persist.

Why it matters

Nike’s struggles in its core categories, which account for roughly 63% of revenue, signal deep structural issues that simple restructuring may not fix. The continued decline in China and the loss of 'cool factor' for iconic franchises like Jordan and Air Force 1 threaten the brand’s long-term market position. Investors and analysts are increasingly skeptical of the 'Pace' plan’s ability to deliver sustainable growth, especially as Nike reduces transparency by stopping regional comparable store sales reporting and merging China into a broader Asia Pacific segment.

What to watch

Nike expects Greater China declines to worsen through the remainder of the year as it completes its digital cleanup. The company plans to launch locally designed products in China this month, starting with a brick-and-mortar exclusive. Further layoffs are expected in the new year as the 'Pace' restructuring continues. Analysts predict that challenges in sportswear and Jordan will persist into fiscal 2028, with North America bearing the brunt of the pain from reduced Jordan supply.