Nike announced plans to downsize its operations following two consecutive quarters of declining revenue, signaling a strategic shift aimed at addressing ongoing sales challenges. The company expects sales to continue falling throughout the fiscal year, prompting measures that include workforce reductions, regional business consolidations, and operational streamlining.

In an internal memo, Chief Executive Elliott Hill outlined the restructuring initiative, emphasizing that it will lead to fewer positions across the corporation. Hill noted that specific decisions on job eliminations would begin in calendar year 2027, though the exact number of affected roles and locations remains undetermined. Shares of Nike dropped 3.7% in after-hours trading, extending the company’s losses this year to approximately 47%, putting it on track for its worst annual performance on record.

Hill, who returned from retirement to take the helm in October 2024 after initially joining Nike as a sales intern in 1988, has been focused on rebuilding relationships with retailers following the company’s prior emphasis on direct-to-consumer sales. Despite these efforts, Nike has faced significant hurdles in Greater China, its second-largest market after the United States, where it has lagged behind competitors such as On and Hoka despite a surge in local sports participation.

Addressing these challenges, Hill acknowledged that Nike’s Greater China operations, along with its Nike Sportswear lifestyle division and Jordan brand, require intensified strategic attention. “We’re taking deliberate actions to strengthen those businesses the right way for the long-term,” he said.

In the United States, sales growth was modest, increasing by 2%. Retailers like Dick’s Sporting Goods reported a slowdown in demand for some of Nike’s iconic footwear lines. Sales of classic Nike Air Force One models in traditional colors such as red, blue, and black were particularly weak, while newer variations of the sneaker experienced comparatively better performance.

As Nike navigates these hurdles, the company’s restructuring aims to realign its business model amid an increasingly competitive global market and shifting consumer preferences.