A new operating model called “Pace”
Nike announced Thursday a “new operating model” designed to deliver roughly $2.5 billion in savings by its 2031 fiscal year. Dubbed “Pace,” the shift will mean “fewer jobs at Nike,” CEO Elliott Hill warned in a message to employees.
Decisions on which roles are affected will come later, Hill said, cautioning that any reports on headcount or geography that surface in the media before then would be pure “speculation.”
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Global reorganization and a new site in India
On a call with analysts, Hill described “a reduction in layers” and a shift of resources toward countries, territories and cities, giving local teams more ownership over results in their markets. Nike expects roughly $1 billion in pre-tax charges, mostly tied to personnel costs, including about $300 million in severance, with $300 million expected to hit fiscal 2027.
The plan also includes modernizing Nike’s global supply chain, opening a new site in India, and realigning the company around three geographic zones, with the changes set to take effect in fiscal 2028.
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Revenue down, sharp drop in China
For its fiscal first quarter, ended in late August, Nike posted revenue of $11.21 billion (down 4% year-on-year) and net income of $712 million (down 2%), both slightly ahead of FactSet’s consensus estimates. Business fell in every region except North America (up 2%), with a sharp 22% drop in China.
Nike shares extended their decline after the earnings call, falling as much as 8.22% in after-hours trading, compared with a 4% drop when the results were first released. For the full 2027 fiscal year, Nike expects revenue to fall by less than 10%.
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