Nike shares tumble after weak revenue outlook and layoff plans underway

Nike topped profit expectations, but missed on revenue. More importantly though, issued a full year outlook that signals a longer turnaround. Sales expected to decline at a high single digit rate this year. North America did improve, but China remains the challenge. Now, management on the call focused on real progress in the performance business. CEO Elliott Hill pointed to growth across running, football, training, and basketball, helping North American return to growth. Nike is seeing early momentum in women's basketball as well, including strong sell-through for its new Caitlin Clark shoe from yesterday. But, that progress is being more than offset by much deeper resets in sportswear, Jordan, and China. Now, those are three of Nike's most important growth engines. So, Nike is now effectively telling investors the pain will last well beyond this year as it clears aged inventory, resets its China wholesale and digital marketplace. Well, analysts are not giving the quarter much credit. Morgan Stanley called the profit beat low quality, while Wells Fargo said it is hard to find good news as estimates come down. Again, City says Nike is increasingly becoming a cost-cutting story, and that's becoming the case here. Nike announcing a restructuring plan called Pace, including supply chain changes, a geographic reorg, two and a half billion dollars in expected savings, including cutting some jobs in 2027. The company CFO saying the largest savings aren't expected to be realized until 2029-2030. So, for now, the street sees November's investor day as the next real test of Nike's credibility.