Updated Version 2 - Nike plans further layoffs and business restructuring due to quarterly sales falling short of expectations.

The full text supplements details and background information

Reuters, October 1 - Nike NKE.N is further advancing its business transformation under CEO Elliott Hill, after the troubled sportswear giant reported quarterly revenues below analysts’ expectations on Thursday and subsequently announced a plan aimed at overhauling its operating model and cutting more jobs.

Like many US retailers, Nike is facing challenges as consumers take a cautious approach to spending amid persistent inflation. However, analysts state that its difficulties mainly stem from strategic missteps and failing to launch enough attractive new products, which has led to increased promotions and discounting activity. Its share price fell 4% in after-hours trading.

The company announced a new plan aimed at changing its operating model, including efforts to modernize the supply chain and further job cuts to save costs.

This plan builds on earlier announced restructuring measures, which also included layoffs, and is expected to achieve about $2.5 billion in cost savings by fiscal year 2031.

Nike expects revenue to decline by a high single-digit percentage in fiscal year 2027. The company previously projected revenue to fall by a low to mid-single-digit percentage in the first half of fiscal 2027.

Greater China remains a weak spot for Nike, while the company also faces challenges in the European market.

S&P Dow Jones Indices removed Nike from the S&P 100 Index (.OEX) during the quarterly rebalancing in September, after the stock had been part of this blue-chip index for 18 consecutive years.

According to data compiled by London Stock Exchange Group (LSEG), the sportswear giant reported sales of $11.2 billion for the first quarter, below analysts’ average expectation of $11.32 billion.

However, thanks to lower warehousing and logistics costs, its gross margin for the quarter ended August 31 rose by 60 basis points to 42.8%.

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