Nike extends its turnaround as Converse sales tumble 28% and revenue falls 4%

Nike released another operational reset on Thursday, this one called Pace, alongside first-quarter revenue down 4% to $11.2 billion. The plan is the third restructuring programme the company has launched since fiscal 2024, and executives warned it means job cuts in the new year.

Chief executive Elliott Hill said on the analyst call that Pace is meant to accelerate the Sport Offense strategy. The same call delivered guidance that revenue will decline in the high-single digits this fiscal year, and the admission that the pain will stretch through this year and next.

Converse continued its collapse, falling 28% in the quarter. Greater China revenue dropped 22%. GlobalData's Neil Saunders calculated that Converse and China between them account for almost 86% of the group's net sales decline, calling them the two most obvious problems.

North America, long a weak spot, did notch 2% growth. That was more than erased by declines in every other region the company reports on. Saunders described Nike as a sprawling enterprise with far too many parts still on the back foot.

Hill opened his framing with deliberate language: "We know what healthy looks like and we're taking deliberate actions to get there." The company also flagged, in its own words, significant work ahead in sportswear, the Jordan brand and China.

Two years ago management told investors the Win Now strategy would be complete by the end of 2025, BNP Paribas analyst Laurent Vasilescu wrote. That was then pushed to the end of 2026.

Vasilescu read the silence plainly: the rightsizing of the business may last several years to come. He also noted that despite three restructuring programmes since fiscal 2024, Nike has produced no operating leverage from any of them so far.

What Pace changes

The plan's job cuts are the latest in a two-year thinning of the organisation. We covered Nike hiring a new commercial chief twice in that stretch, first reviving the role and then appointing a Walmart veteran to it, as the company reshuffled its leadership around the declining top line.

Needham analyst Tom Nikic put turnaround visibility at very low, even with early signs of success in running, training and basketball. The Consumer Collective's Jessica Ramírez went further, saying the green shoots in performance are not enough to offset parts of the business with no clear path back.

On sportswear specifically, Ramírez said the company feels out of touch, and questioned whether Hill may be over his head in that category. Her critique landed in a quarter where Nike publicly acknowledged the sportswear segment as one of the three areas needing the most work.

Saunders said the actions themselves are not wrong, but added that the plan feels a bit like rearranging deckchairs on the Titanic before the fundamental issues are dealt with. It is a sharper verdict than Nike offered about its own prospects.

Nike said the Air Force 1 has regained stability, a goal the company has pursued for several quarters as it worked to right-size inventory across its key footwear franchises. That was paired with the disclosure that the Jordan brand is now oversupplied.

The fix for that is to pull back on retro product. It is the same inventory discipline Nike applied to the Air Force 1, applied now to Jordan, and it means the franchise that built much of Nike's cultural weight is being deliberately scaled down.

Jordan has been central to the turnaround story since the start. When we covered Nike putting LVMH's Alexandre Arnault on its board, the move came a week after the company lost its S&P 100 seat and with warnings that the top line was still worsening.

That S&P 100 removal, which we reported when it took effect in September after an 18-year run, was the market's own measure of how far Nike has fallen. A quarter later the company is telling the same market it will take several more years to put right.

The pace of the reset is also being tested competitively. On has signed Kylian Mbappé to front its first soccer line, a marquee bet against Nike and Adidas that analysts argued over when we covered it, and soccer is one of the categories Nike is built on.

What Nike is not offering investors is a date. Hill's deliberate language stood against Vasilescu's observation that the previous timeline has been dropped without replacement, leaving analysts to assemble their own view of how long the pain runs.

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Image: Courtesy of Nike