When Nike veteran Elliott Hill was tapped to take on the CEO role two years ago, the headlines largely revolved around a DTC strategy that had gone too far, leaving wholesale partners feeling abandoned and allowing competitors a chance to gain a stronger foothold at retail.
Also at issue was an overly generous distribution strategy that flooded the market with some of Nike’s core footwear franchises — namely the Air Force 1, Air Jordan and Dunk — denting their cool factor.
At the time, Hill had a simple answer to these problems: “Let’s see more of Nike being Nike.” A turnaround required the sportswear giant to refocus its organization on sport, accelerate product innovation, reset its core footwear franchises and reignite its relationship with wholesale partners.
The company — which had already cut about 2% of its workforce earlier that year — announced additional layoffs in 2025, this time amounting to less than 1% of its workforce, as Hill restructured the company around key sports versus consumer demographics. These cuts would set Nike “up to win,” a spokesperson said at the time.
Except that wasn’t the end of it either. Nike’s latest earnings report included another operational reset, which calls for an unspecified number of layoffs in the new year. And Nike’s problems have now grown to include more than just DTC and some oversupplied franchises.
John Donahoe, who led the retailer’s ill-fated DTC push, at the end of fiscal 2023 touted “strong growth” across Nike, Jordan and Converse. He said the consumer was “back” in China and that Jordan was “well on its way to becoming the second largest footwear brand in North America.”
Three years later, Converse, China and the Jordan brand are all declining in the double digits. So is sportswear, which contains some of the brand’s main footwear franchises.
“Taken together, Sportswear, Jordan Brand and Greater China represent significant work ahead,” Hill said on the company’s latest earnings call, “but we know what healthy looks like and we're taking deliberate actions to get there.”
While declines at Converse are concerning in their own right, we look below at the three areas Hill identified as critical for improvement as Nike embarks on its latest restructuring plan.
Nike Sportswear
Nike’s sportswear segment, which includes some of its largest footwear franchises, was down low double-digits in the retailer’s most recent quarter. It represented a little under half of the retailer’s revenue in the quarter.
“The decline reflected a combination of deliberate actions, product underperformance and broader marketplace pressure,” Hill said.
One of those deliberate actions was the reduction of Dunk revenue by almost 50%, which excised $200 million from the division’s top-line in Q1. Some older footwear within the sportswear segment also sold “below expectations,” Hill said. Future order books are taking a hit as well, as Nike works with wholesale partners to move through excess inventory.
“In the sportswear category in particular the company feels out of touch. At this point we are questioning whether Elliott Hill may be over his head when it comes to this category and how it needs to be approached,” Jessica Ramírez, co-founder and managing director of The Consumer Collective, said in emailed comments at the time. “At this rate we believe competitive sportswear brands and lifestyle brands with strong sneaker assortments — and that are growing their lifestyle offerings and image — will further dent Nike's market share.”
There are some bright spots, including a new Studio Fleece launch, which was the retailer’s best-performing apparel collection during the quarter. The Air Force 1 is also now “driving a stable full-price business,” Hill said, and other footwear franchises grew by double digits in the quarter.
“Where we have introduced newness at scale, we've seen early success,” he added.
Still, problems in the category will likely continue to hurt Nike’s sales through its current fiscal year and into the next one.
“Overall, there's a lack of energy in the lifestyle space right now, which is impacting traffic,” Hill said. “Yes, the consumer is cautious. But as the leader in the industry, it's on us to bring more creativity to sportswear.”
Greater China
After facing revenue declines in both fiscal 2025 and fiscal 2026, Greater China kicked off Nike’s fiscal 2027 with another 22% decline.
Nike has a couple of plans in place to restore the region to growth. New leadership was announced in January, with longtime Nike veteran Cathy Sparks taking on oversight of the geography as vice president and general manager of Greater China. The leaders of Nike’s four regions also joined Hill’s senior leadership team as of December.
Nike announced over the summer a plan to reset its online distribution model in China as well, which had become overly fragmented. The brand is sold across more than 1,000 digital storefronts, many of which are run by just 16 Nike partners. Come January, Nike will sell through the Nike app and website in China, and on Nike flagship experiences on Tmall, JD.com and Douyin.
The effort is aimed at creating “a more premium brand presentation with clearer product stories and a more connected consumer journey,” Hill said in early October.
Nike will also invest in local product creation in China, with the first collection made specifically for the Chinese consumer launching this month.
“It will be a brick-and-mortar only launch purposely,” Hill said. “And then we will continue to deliver products over time, products and assortments that are locally designed, developed and even manufactured in China.”
The retailer has its eye on the brick-and-mortar experience more broadly in China, noting that many of its partners have not refreshed their stores over the past seven years.
“In the near term, revenues and profitability in China will be impacted,” Hill said. “We expect our digital cleanup to take multiple seasons as we continue to take targeted actions with our partners to improve inventory levels.”
As a result, declines in Greater China will be “even worse the remainder of the year,” Needham analysts led by Tom Nikic said in emailed comments. Like sportswear, China is likely to be impacting Nike well into fiscal 2028, Nikic noted.
Muddying the waters is a plan to consolidate Nike’s four geographies into three: As part of the Pace restructuring program, Greater China will join a larger group in fiscal 2028 that also contains Asia Pacific. BNP Paribas Equity Research analyst Laurent Vasilescu noted that this will give analysts less visibility into trends in China, which is “critically important” to understanding Nike’s future growth.
“While this change has already been known, we believe it is unfairly being done under the guise of restructuring when it is simply a way for Nike to create a new APGC (Asia Pacific and Greater China) segment and give investors less transparency in disaggregating China sales,” Vasilescu wrote.
At the same time, Vasilescu noted that Nike has stopped reporting comparable store sales by region, something it has done since fiscal year 2011.
“Not only does the pulling of this disclosure make years of comp store sales data not useful for comparisons sake, but it reduces the transparency on if brick and mortar growth is being driven by like for like sales or simply unit expansion,” Vasilescu wrote.
Jordan
The Jordan Brand, which raked in $8.7 billion in fiscal 2024, was down roughly 20% from that benchmark by the end of fiscal 2026. In Q1, revenue fell again, this time by the mid-teens.
Jordan made up about 13% of Nike’s business in the quarter, according to Hill. The issue, the executive said, is that Nike has been oversupplying its retro Jordan product.
Indeed, Needham’s Nikic found in a recent sneaker report that six out of seven retro Jordan launches in September were trading at a discount on the resale market, “reflecting subdued demand for this struggling franchise.”
In order to return the iconic brand to growth, Nike plans to pull back on both the volume and frequency of retro Jordan launches, much as it has had to do with the Air Jordan 1 already.
“We've discussed it with our wholesale partners,” Hill said. “Together, we will restore balance to the marketplace to create a foundation for more profitable and sustainable growth.”
Until then, North America will bear the brunt of the pain.
While Jordan has been a challenge for Nike before Q1, it appears to be a bigger one now, analysts noted.
“From a product standpoint, Nike used to isolate the problems to Nike Sportswear and Jordan Streetwear,” Vasilescu wrote earlier this month. “Tonight, we heard that the Jordan brand, not just Jordan Streetwear, needs to be rightsized.”
There are pieces of Nike’s business that are performing strongly. Executives touted strong growth in its performance business, and revenues were up slightly in Nike’s largest region of North America. But taken together, Jordan and Nike sportswear account for roughly 63% of the company’s revenues.
If a turnaround is to happen, progress must be made there, too.
“When consumers see the Jumpman, it should feel special, it should feel earned,” Hill said of the company’s Jordan brand. “And every decision we're making is designed to ensure the Jordan Brand remains as coveted a decade from now as it has been for the past several decades.”
